Excise record discrepancies sustain duty and penalty, but confiscation fails where seized goods remain inside the factory.

Discrepancies in statutory excise records, coupled with unretracted statements admitting the accounting method and movement of goods without intimation, supported the demand of duty and the penalty for non-compliance with record-keeping requirements. However, confiscation of the seized goods was not sustainable because the goods were found inside the factory and there was no evidence of actual clandestine removal or attempt to move them out at that stage. The record-based admissions justified fiscal liability, but mere suspicion did not justify confiscation on the facts found during inspection.

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Issues: Whether the confiscation of seized goods, the duty demand, and the penalty were sustainable on the facts found during inspection and on the basis of the statements and records produced.

Analysis: The material on record showed that the appellant followed a disputed method of maintaining RG1 entries and that the departmental officers found a discrepancy between the recorded stock and the physical stock. The statements recorded under section 14 were not retracted and contained admissions regarding the manner of accounting and the shifting of goods without intimation. On that basis, the finding of non-compliance with the excise record-keeping requirements and the demand of duty and penalty were upheld. At the same time, the seized goods were found to be lying inside the factory and there was no attempt to move them the premises or other material showing actual clandestine removal at that stage, so confiscation was not justified.

Conclusion: The duty demand and penalty were sustained, but the confiscation of the seized goods was set aside.

Ratio Decidendi: Where discrepancy in statutory excise records is admitted and the statements are unretracted, duty and penalty may be sustained, but confiscation cannot be upheld merely on suspicion when the goods are found within the factory and no attempt at removal is shown.

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