Unlicensed manufacture of excisable goods attracted confiscation and penalty under the Central Excise Rules, with later Section 11AC inapplicable.

Assembly of cars from component parts was treated as manufacture of a distinct excisable commodity, which required a licence under Rule 174 of the Central Excise Rules. Because the appellant carried out unlicensed manufacture, the case fell within Rule 173Q(1)(c), under which the goods were liable to confiscation and the manufacturer liable to penalty. The later introduction of Section 11AC was irrelevant to liability for the earlier period, and arguments based on bona fide belief or absence of mens rea were distinguished on the facts. The confiscation of the cars, along with redemption fine and penalty, was therefore upheld.

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Issues: Whether the confiscation of the cars assembled from components, together with the redemption fine and penalty, was justified under Rule 173Q(1)(c) of the Central Excise Rules despite the plea of absence of mens rea and the inapplicability of Section 11AC of the Central Excise Act.

Analysis: Assembly of cars from component parts resulted in manufacture of an excisable commodity distinct from its inputs, attracting excise duty. Once the activity amounted to manufacture, the manufacturer was required to obtain a licence under Rule 174 of the Central Excise Rules. The appellant had undertaken manufacture without such licence, bringing the case within Rule 173Q(1)(c), which provides that goods so manufactured shall be liable to confiscation and the manufacturer shall be liable to penalty. Section 11AC had not come into force at the relevant time, so its conditions were irrelevant to confiscation under the then applicable rule. The authorities cited on bona fide belief and mens rea were distinguished on facts.

Conclusion: The confiscation of the cars and the imposition of redemption fine and penalty were upheld, and the issue was decided against the appellant.

Final Conclusion: The appeal failed because the unlicensed manufacture of excisable goods attracted confiscation and penalty under the applicable Central Excise Rules.

Ratio Decidendi: Where excisable goods are manufactured without the required licence, Rule 173Q(1)(c) mandates confiscation and penalty, and the later introduction of Section 11AC does not control such liability for the earlier period.

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