Non-accountal penalty under excise law cannot extend beyond the notice or goods shown to be assessee-made.

Penalty under Rule 173Q(1)(b) for non-accountal of excisable goods applies only to goods manufactured, produced or stored by the assessee. Where the notice was confined to compressors and did not allege manufacture of the crankcase, connecting rods, or other housings, penalty could not be sustained on those items. The parts received from other manufacturers and not processed by the assessee were outside the statutory basis invoked, and the adverse finding also travelled beyond the scope of the notice. The penalty was therefore held unsustainable and was set aside.

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Issues: Whether penalty could be sustained under Rule 173Q(1)(b) for non-accountal of goods not covered by the notice and not shown to have been manufactured by the appellant.

Analysis: Rule 173Q(1)(b) fastens liability only where a manufacturer does not account for excisable goods manufactured, produced or stored by it. The notice did not allege manufacture of the crankcase and connecting rods, nor did it suggest that the final machining carried out on those parts amounted to manufacture. The upper and lower housings were admittedly received from other manufacturers and were not subjected to processing by the appellant. The notice was confined to compressors, and did not propose penalty on the separate footing of incorrect accounts of these parts. The penalty imposed by the Collector for those goods therefore travelled beyond the notice and could not be sustained.

Conclusion: The penalty was not sustainable and the appellant succeeded.

Final Conclusion: The impugned penalty order was set aside because the adverse finding rested on matters outside the scope of the notice and outside the statutory basis invoked.

Ratio Decidendi: Penalty for non-accountal of excisable goods cannot be imposed on goods or allegations not covered by the notice, and cannot be upheld unless the goods are shown to be those manufactured, produced or stored by the assessee within the meaning of the penalty provision.

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