Fully exempt goods are non-excisable, so penalty and confiscation provisions for excisable goods cannot be applied.

Fully exempt goods are treated as non-excisable goods, and penalty under Rule 173Q can apply only to excisable goods. On that basis, confiscation cannot be sustained against goods that are fully exempt from duty, and any related penalty is also unsustainable. The impugned order was therefore set aside, with consequential relief granted according to law.

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Issues: Whether penalty and confiscation could be sustained when the goods were held to be fully exempt and, therefore, non-excisable.

Analysis: Penalty under Rule 173Q is attracted only in respect of excisable goods. The decision relied on the principle that where goods are fully exempt from duty, they cease to be excisable goods. Once the goods are treated as non-excisable, confiscation cannot be legally maintained and penalty in relation to such goods also becomes unsustainable.

Conclusion: Penalty and confiscation were not sustainable.

Final Conclusion: The impugned order was set aside and consequential relief followed in accordance with law.

Ratio Decidendi: Fully exempt goods are not excisable goods, and penalty or confiscation provisions applicable only to excisable goods cannot be invoked against them.

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