Outside storage of goods with granted permission and accepted security cannot attract confiscation or penalty.

Sugar stored outside factory premises pursuant to competent permission, and after the required bond and bank guarantee were submitted and accepted, was not treated as unauthorized storage. The accepted security satisfied the revenue-protection condition in the trade notice, so confiscation of the sugar bags was unjustified. As the confiscation itself failed, the consequential penalty was also unsustainable. The operative principle is that goods cannot be confiscated merely because outside storage was used for operational urgency when the prescribed permission and security safeguards have been fulfilled.

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Issues: Whether sugar stored outside the factory premises was liable to confiscation and consequential penalty when permission for outside storage had been granted and the bond and bank guarantee were subsequently accepted.

Analysis: The appellant had applied for permission to store non-duty paid sugar outside the factory premises, and the permission was granted by the competent authority. The bond and bank guarantee were thereafter submitted and accepted by the jurisdictional office. The conditions in the trade notice were intended to secure the revenue, and the accepted bond showed compliance with the procedural safeguard required for outside storage. On these facts, the outside storage could not be treated as unauthorized or as attracting confiscation.

Conclusion: The confiscation of the sugar bags was not justified and the penalty based on such confiscation was also unsustainable, in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded on the core question of validity of confiscation and penalty.

Ratio Decidendi: Where competent permission for outside storage is granted and the security requirement is fulfilled and accepted, the goods cannot be confiscated merely because storage occurred in response to operational urgency.

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