Technical lapse in excise storage did not justify confiscation, but unaccounted goods attracted a reduced penalty.

A technical lapse in storing excisable goods in a factory corridor while the bonded store room was under repair, without intimation to the Department, was treated as insufficient to justify confiscation or redemption fine. For 187 bottles not accounted for in statutory records, confiscation was upheld because the goods remained unaccounted for, but the lapse was viewed as a mix-up rather than a serious violation. The penalty was therefore reduced to a nominal amount and no redemption fine was sustained on that quantity. The stated principle is that absence of mala fide intent may defeat confiscation and redemption fine for a procedural irregularity, while limited penalty may still apply for unaccounted goods.

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Issues: (i) Whether confiscation and redemption fine were justified for excisable goods stored in the factory corridor because the bonded store room was under repair; (ii) whether penalty could be sustained in respect of 187 bottles not accounted for in the statutory records.

Issue (i): Whether confiscation and redemption fine were justified for excisable goods stored in the factory corridor because the bonded store room was under repair.

Analysis: The goods were found outside the bonded store room due to repair work in that room. The only lapse was non-intimation to the Department. On these facts, the irregularity was technical and did not warrant confiscation or redemption fine.

Conclusion: Confiscation of the goods stored in the corridor and the redemption fine were not sustainable.

Issue (ii): Whether penalty could be sustained in respect of 187 bottles not accounted for in the statutory records.

Analysis: The 187 bottles were treated as not accounted for, and their seizure and confiscation were found to be justified. At the same time, the duty involved was small and the lapse was considered to arise from a mix-up, so no redemption fine was called for on this quantity. However, a penalty was considered appropriate for the technical violation.

Conclusion: Confiscation of the 187 bottles was upheld, but the penalty was reduced to Rs. 1,000 and the redemption fine on this quantity was not sustained.

Final Conclusion: The assessee obtained substantial relief: the redemption fine was set aside, and the penalty was reduced, while confiscation of the unaccounted bottles was maintained.

Ratio Decidendi: A mere technical lapse in not intimating storage of excisable goods outside the bonded premises, without mala fide intent, does not justify confiscation and redemption fine, though a limited penalty may still be imposed where goods remain unaccounted for.

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