Excess stock confiscation not sustainable absent clandestine removal, but penalty for non-maintenance of registers was upheld.

Excess sugar and molasses found inside the factory premises could not be confiscated merely because the stock exceeded the recorded balance, where there was no material indicating intended clandestine removal; the confiscation and redemption fine were therefore set aside. The separate penalty for non-maintenance of the relevant registers was sustained because the lapse was undisputed and the penalty was not shown to be excessive. The appeal thus succeeded only on the confiscation issue, while the penalty remained in force.

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Issues: (i) Whether confiscation of excess sugar and molasses found lying in the factory premises, with redemption fine, was sustainable; (ii) Whether the penalty imposed for non-maintenance of the relevant registers was justified.

Issue (i): Whether confiscation of excess sugar and molasses found lying in the factory premises, with redemption fine, was sustainable.

Analysis: The excess goods were found inside the assessee's factory premises and there was no material to show any intention to remove them clandestinely. In such circumstances, seizure and confiscation of goods merely because they were in excess of the recorded balance was not legally sustainable.

Conclusion: The confiscation and redemption fine were set aside in favour of the assessee.

Issue (ii): Whether the penalty imposed for non-maintenance of the relevant registers was justified.

Analysis: The relevant registers were not properly maintained, and that lapse was not disputed. On that footing, the imposition of penalty was warranted, and the amount was not shown to be excessive.

Conclusion: The penalty was upheld against the assessee.

Final Conclusion: The appeal succeeded only to the extent of setting aside confiscation and redemption fine, while the penalty was maintained.

Ratio Decidendi: Goods found within the assessee's factory premises, without evidence of intended clandestine removal, cannot be validly confiscated merely on the basis of excess stock, though penalty may still be imposed for proven non-maintenance of statutory records.

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