Exempt goods and expired storage permission do not justify confiscation or penalty without a specific rule breach or intent to evade duty.

Exempt scooter bodies stored after expiry of permission were not liable to confiscation or penalty under the Central Excise Rules because the authority identified no specific contravention attracting Rule 173Q or Rule 210. The goods were covered by exemption notifications and therefore were not required to be treated as excisable goods for accounting purposes under Rule 173Q(1)(b). The record also showed no mala fide intent or design to evade duty. In these circumstances, confiscation and penalty could not be sustained merely on the basis of expired storage permission.

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Issues: Whether scooter bodies stored in premises after expiry of permission, but held exempt from central excise duty, were liable to confiscation and penalty under the Central Excise Rules.

Analysis: The permission to store the goods had expired, but the adjudicating authority did not identify any specific contravention attracting confiscation. The goods were found to be exempt from duty under the relevant notifications, and therefore they were not required to be accounted for as excisable goods under Rule 173Q(1)(b). The record also disclosed no mala fide intention or design to evade duty. In these circumstances, Rule 173Q and Rule 210 could not be invoked to sustain confiscation or penalty.

Conclusion: The confiscation and penalty were not sustainable; the appeal was allowed.

Ratio Decidendi: Exempt goods are not liable to confiscation or penalty merely because they were stored without valid permission, unless a specific contravention under the rules or an intent to evade duty is established.

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