Confiscation of unrecorded excisable goods upheld; Rule 209A penalty requires proof of knowledge that goods were liable to confiscation.

Excisable goods must be entered in the prescribed records, and goods cleared without duty or not duly accounted for are liable to confiscation and penalty. The settlement under the Kar Vivad Samadhan Scheme did not bar confiscation or penalty for the seized goods. Goods bearing another's brand name and goods meant for export remained subject to the record-keeping and clearance requirements, and the explanation of an employee's prolonged sickness was rejected. Penalty was upheld against the manufacturers and Shri Tarun Oberoi, but penalty under Rule 209A could not be imposed on M/s. Reebok India Co. without proof of knowledge or reason to believe that the goods were liable to confiscation; its penalty was set aside.

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Issues: (i) whether the seized excisable goods, including goods not entered in RG-1 or cleared without payment of duty, were liable to confiscation and whether penalty was imposable on the manufacturers and connected persons; (ii) whether M/s. Reebok India Co. was liable to penalty as a co-noticee under Rule 209A.

Issue (i): whether the seized excisable goods, including goods not entered in RG-1 or cleared without payment of duty, were liable to confiscation and whether penalty was imposable on the manufacturers and connected persons.

Analysis: The proceedings were held to be independent of the earlier settlement under the Kar Vivad Samadhan Scheme and that settlement did not bar confiscation or penalty in respect of the seized goods. Goods bearing the brand name of others and cleared without payment of duty were held liable to confiscation. As to goods not entered in RG-1, the Court applied the statutory requirement of maintaining daily stock accounts and held that manufactured goods must be accounted for when production or clearance takes place. The explanation of prolonged sickness of an employee was found insufficient. The claim that goods meant for export were outside the record-keeping requirement was rejected because export goods are still required to be accounted for and cleared under the applicable procedure. Penalty was also held imposable on the manufacturers and on Shri Tarun Oberoi, who was found to be looking after the affairs of the firm.

Conclusion: The confiscation of the seized goods was sustained, and penalty was held imposable on the manufacturers and Shri Tarun Oberoi, though the quantum of fine and penalty was reduced.

Issue (ii): whether M/s. Reebok India Co. was liable to penalty as a co-noticee under Rule 209A.

Analysis: Penalty under Rule 209A requires knowledge or reason to believe that the goods were liable to confiscation. On the facts, such guilty knowledge was not established against M/s. Reebok India Co. The duty paid by them on the seized goods was nonetheless appropriated as upheld.

Conclusion: Penalty on M/s. Reebok India Co. was set aside, while appropriation of duty was upheld and redemption fine was reduced.

Final Conclusion: The appeal succeeded only in part: confiscation of the seized goods was maintained, penalties were reduced in some cases, and the penalty on M/s. Reebok India Co. was deleted.

Ratio Decidendi: Excisable goods must be entered in the prescribed statutory records and goods cleared without payment of duty or not duly accounted for are liable to confiscation and penalty; however, penalty under Rule 209A cannot be imposed without proof that the person knew or had reason to believe the goods were liable to confiscation.

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