RG-1 non-entry alone cannot justify confiscation or penalty absent proof of clandestine removal or wrongful intent.

Finished goods found within the factory premises were not liable to confiscation or penalty merely because they were not entered in the RG-1 register. The departmental allegation of non-entry was not supported by proper enquiry, and no material showed mala fide intent, clandestine removal, or an attempt to clear the goods without payment of duty. In the absence of proof that the goods had become ripe for RG-1 entry or were meant for illicit removal, Rule 173Q could not be invoked. The confiscation and penalty were therefore set aside.

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Issues: Whether finished goods found in the factory premises, though not entered in the RG-1 register, could be confiscated and subjected to penalty under Rule 173Q of the Central Excise Rules.

Analysis: The goods remained within the factory premises and the only allegation was non-entry in RG-1. The explanation that the goods were awaiting inspection by the Railway authorities was not rebutted by any proper enquiry or verification, and no material was brought to show mala fide intention or an attempt to clear the goods without payment of duty. In the absence of evidence showing that the goods had become ripe for RG-1 entry or were meant for clandestine removal, non-entry by itself was insufficient to sustain confiscation or penalty.

Conclusion: The confiscation and penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: Mere non-entry of goods in RG-1, without proof of wrongful intent or intended illicit removal, does not justify confiscation or penalty.

Ratio Decidendi: Non-entry of goods in RG-1, by itself, cannot justify confiscation or penalty unless the department establishes a definite irregularity and an intent to remove the goods without payment of duty.

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