Stock shortage in excisable goods may be treated as duty evasion, with confiscation sustained and fine reduced.

Where excisable goods recorded in statutory stock accounts are found short and the manufacturer gives no satisfactory explanation or proof of duty-paid clearance, the shortage may be treated as removal without payment of duty. Unaccounted goods are then liable to confiscation. The text also notes that, although confiscation and penalty can be sustained on such facts, the redemption fine and penalty may be reduced where they are excessive having regard to the duty involved and the value of the goods.

---

---

Issues: (i) Whether the shortage and excess of finished goods reflected a removal of goods without payment of duty; (ii) whether confiscation, redemption fine and penalty were sustainable and, if so, to what extent.

Issue (i): Whether the shortage and excess of finished goods reflected a removal of goods without payment of duty.

Analysis: The discrepancy was treated as arising between the stock declared and the actual stock found on verification. The explanation that the difference resulted from errors in the earlier stock-taking or from vague human error and labour mistakes was not accepted as satisfactory. In the absence of any convincing explanation for the shortage or evidence of duty-paid clearance, the goods were taken to have been removed without payment of duty.

Conclusion: The shortage was rightly treated as removal of excisable goods without payment of duty.

Issue (ii): Whether confiscation, redemption fine and penalty were sustainable and, if so, to what extent.

Analysis: Unaccounted excisable goods were held liable to confiscation. The cited decisions on a different factual matrix did not assist the appellant. However, while the confiscation and imposition of penalty were sustained, the amount of fine and penalty was considered excessive having regard to the duty involved and the value of goods, warranting reduction.

Conclusion: Confiscation was sustained, while the redemption fine and penalty were reduced.

Final Conclusion: The demand and confiscation were upheld, but the monetary consequences were scaled down to a lesser amount.

Ratio Decidendi: Where excisable goods shown in statutory stock records are found short and the manufacturer offers no satisfactory explanation or proof of duty-paid clearance, the shortage may be treated as removal without payment of duty and the unaccounted goods are liable to confiscation, subject to appropriate moderation of fine and penalty on the facts.

---