Record-keeping for excess goods and raw materials justified deletion of confiscation and penalty limited by statutory ceiling.

Excess finished goods had to be accounted for in RG 1 at the time of clearance, and raw material was also required to be entered in the prescribed records. On that basis, the Commissioner (Appeals) was justified in deleting confiscation of the excess raw material. The reduction of penalty was also consistent with Rule 226, which prescribed a statutory ceiling of Rs. 2,000. The appellate view therefore stood, and the departmental challenge failed.

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Issues: Whether the Commissioner (Appeals) was right in setting aside confiscation of excess raw material and reducing the penalty to the statutory maximum under Rule 226.

Analysis: The excess finished goods were required to be accounted for in RG 1 at the stage of clearance, and the raw material was also required to be entered in the prescribed records. The order reducing the penalty was consistent with the statutory ceiling prescribed under Rule 226, which capped the penalty at Rs. 2,000.

Conclusion: The Commissioner (Appeals) committed no error in deleting the confiscation and restricting the penalty to the statutory maximum; the department's challenge failed.

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