Failure to account for excisable goods outside the bonded store room attracts penalty even without intent to evade duty.

Excisable goods kept within the factory but outside the approved bonded store room, and not properly recorded in statutory accounts, were treated as a breach of Rule 53 of the Central Excise Rules, 1944. Rule 173Q(1)(b) was applied to failure to account for excisable goods without requiring proof of intent to evade duty, so penal consequences were sustainable. However, the absence of clandestine removal and the practical storage constraints supported a substantial reduction in the fine and penalty, and confiscation was not considered necessary in the circumstances.

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Issues: Whether goods stored in a place other than the approved bonded store room and not properly entered in statutory records attracted confiscation and penalty, and whether the quantum of fine and penalty required reduction.

Analysis: The goods were found within the factory but outside the approved bonded store room, constituting a violation of Rule 53 of the Central Excise Rules, 1944. The Tribunal held that Rule 173Q(1)(b) covered failure to account for excisable goods and did not require proof of intent to evade duty. However, the absence of clandestine removal, the lack of space in the bonded store room, and the finding that the goods remained within the factory supported only limited penal action. The Tribunal also noted that confiscation was not called for in the circumstances, but a reduced penalty was justified.

Conclusion: The fine and penalty were warranted but deserved substantial reduction, and the assessee succeeded to that limited extent.

Final Conclusion: The order was modified by reducing the fine and penalty, while sustaining penal consequences for breach of excise storage and accountal requirements.

Ratio Decidendi: Where excisable goods are kept outside the approved bonded store room and are not properly accounted for, penalty under Rule 173Q(1)(b) is sustainable even without proof of mens rea, though the quantum may be reduced when clandestine removal is absent.

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