RG-1 non-entry alone cannot justify confiscation or penalty when goods remain in factory and clandestine removal is not shown.

Mere non-entry of goods in RG-1 did not justify confiscation or penalty where the goods remained within the licensed factory, had not completed the manufacturing process, and there was no evidence of clandestine removal. The record showed that the goods were still unfinished and had not undergone all steps required to make them marketable as bulk drugs. In these circumstances, absence of RG-1 entry alone was insufficient to sustain excise confiscation or penalty, and the impugned order was set aside with consequential relief.

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Issues: Whether goods lying within the factory premises, which had not attained full manufacturing stage and were not entered in RG-1, were liable to confiscation and whether penalty under the excise provisions could be sustained.

Analysis: The goods remained inside the licensed factory premises and there was no material showing an attempt to remove them clandestinely. The record also indicated that some goods were still unfinished or had not undergone all processes necessary to make them marketable as bulk drugs, including batch numbering and other requirements. Mere non-entry in RG-1, without evidence of intended clandestine clearance and where manufacture was not complete, was insufficient to justify confiscation or penalty.

Conclusion: The confiscation and penalties were not sustainable and the assessee succeeded on this issue.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Mere non-entry in RG-1 does not justify confiscation or penalty when the goods remain within the factory, are not fully manufactured, and there is no evidence of clandestine removal.

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