Purchaser not liable for excise duty or penalty, but seized goods remained confiscable for removal without duty payment.

Duty under Rule 9(2) and personal penalty under Rule 173Q could not be imposed on a purchaser who was not the manufacturer of the seized yarn, because those provisions fasten liability on the producer, manufacturer, or warehouse licensee for the relevant contraventions. The confiscatory consequence was different: once excisable goods were shown to have been removed without payment of duty, the goods themselves remained liable to confiscation under Rule 173Q, and the lack of supporting documents reinforced that result. The note therefore distinguishes personal liability from confiscation of the goods, with the latter continuing to apply despite the purchaser's non-manufacturer status.

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Issues: (i) Whether duty demand and personal penalty could be sustained against a purchaser who was not the manufacturer of the seized yarn. (ii) Whether the seized goods were liable to confiscation under Rule 173Q of the Central Excise Rules, 1944.

Issue (i): Whether duty demand and personal penalty could be sustained against a purchaser who was not the manufacturer of the seized yarn.

Analysis: Duty under Rule 9(2) is attracted against the producer or manufacturer for removal or deposit of excisable goods in contravention of Rule 9(1). Likewise, Rule 173Q provides for penalty on the manufacturer, producer or warehouse licensee for specified contraventions and does not extend such penalty to a purchaser merely because the goods were not supported by bills, vouchers or gate passes. Since the appellants were admittedly not the manufacturers of the yarn, the duty demand and penalty could not be fastened upon them.

Conclusion: The duty demand and personal penalty were not sustainable against the appellants.

Issue (ii): Whether the seized goods were liable to confiscation under Rule 173Q of the Central Excise Rules, 1944.

Analysis: Rule 173Q attaches liability to the goods where excisable goods have been cleared without payment of duty by the manufacturer, producer or warehouse licensee. Once the department established that the goods had been removed without payment of duty, the goods themselves became liable to confiscation. The absence of documents showing lawful acquisition reinforced the tainted character of the goods for confiscation purposes.

Conclusion: The confiscation of the seized goods was upheld, with option to redeem.

Final Conclusion: The duty demand and penalty were set aside, but the confiscation of the seized goods was sustained with redemption option, resulting in only partial relief to the appellants.

Ratio Decidendi: Duty and penalty cannot be imposed on a purchaser who is not the manufacturer, but excisable goods cleared without payment of duty remain liable to confiscation under the confiscatory rule applicable to the goods.

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