Non-entry of fully manufactured goods in stock records can justify confiscation, but unfinished goods need not be entered in RG-1.

Coolers found without bottom pads were treated as not yet fully manufactured or marketable, so they were not required to be entered in RG-1 and their non-entry could not sustain confiscation; relief on that point was maintained. Packed air conditioners found without entry in the statutory stock account were treated as fully manufactured goods required to be recorded under the excise stock provisions, and their non-entry justified confiscation under the penal rule. The explanation for those units was rejected on the facts, so confiscation stood, subject to reduced redemption fine and penalty.

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Issues: (i) whether coolers found without bottom pads were fully manufactured goods required to be entered in RG-1 and liable to confiscation; (ii) whether packed air conditioners not entered in the statutory stock account were liable to confiscation and consequential penalty and redemption fine.

Issue (i): whether coolers found without bottom pads were fully manufactured goods required to be entered in RG-1 and liable to confiscation

Analysis: The coolers were found without bottom pads, and therefore were not in a fully manufactured and marketable condition ready for removal. Goods which have not reached the stage of full manufacture are not required to be entered in RG-1, and absence of such entry cannot by itself sustain confiscation.

Conclusion: The coolers were not liable to confiscation and the relief granted to the assessee on this issue was sustained.

Issue (ii): whether packed air conditioners not entered in the statutory stock account were liable to confiscation and consequential penalty and redemption fine

Analysis: The air conditioners were found in packed condition, and the record did not establish that they had been manufactured and entered in the daily stock account on the relevant date. Under Rule 53, manufactured goods are to be accounted for in the statutory register, and non-entry of fully manufactured goods is a circumstance attracting confiscation under Rule 173Q(1)(b). The explanation offered for the six air conditioners was not accepted on the facts found.

Conclusion: The air conditioners were liable to confiscation, with redemption on payment of reduced fine and imposition of reduced penalty.

Final Conclusion: The appeal succeeded only in part: confiscation was upheld for the air conditioners with modified fine and penalty, while the coolers were held not liable to confiscation.

Ratio Decidendi: Goods not yet fully manufactured and not at the RG-1 stage are not liable to confiscation for non-entry, but fully manufactured goods found packed and not entered in the statutory stock account may be confiscated under the excise penal provisions.

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