Unaccounted finished goods under excise rules can attract confiscation, but absence of clandestine removal may justify only token penalty.

Unaccounted finished goods under Rule 173Q(1)(b) of the Central Excise Rules, 1944 may attract confiscation even where mens rea is absent, because non-entry in statutory records by itself can constitute the breach. The explanation that the goods were awaiting internal testing and buyer inspection did not justify omission from the register. However, where the goods were otherwise manufactured, packed and ready, and no clandestine removal was shown, confiscation was considered unnecessary on the facts. CEGAT therefore set aside confiscation and sustained only a token penalty, granting partial relief to the assessee.

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Issues: Whether confiscation of the unaccounted finished goods and the consequential penalty were sustainable under Rule 173Q(1)(b) of the Central Excise Rules, 1944.

Analysis: The goods were found manufactured and packed, but not entered in the statutory records. The Tribunal held that, for confiscation under Rule 173Q(1)(b), absence of mens rea is not decisive, and non-accounting by itself can attract the provision. At the same time, the explanation that the goods were awaiting internal testing and buyer inspection did not justify the omission to enter them in the register. Since the goods were otherwise ready and no attempt at clandestine removal was shown, confiscation was considered unnecessary in the facts of the case, though some penalty was warranted.

Conclusion: Confiscation was set aside and the penalty was reduced to a token amount, resulting in partial relief to the assessee.

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