Storage breach outside prescribed area supports confiscation, while excessive penalty may be reduced despite upheld non-compliance.

Goods kept outside the prescribed storage area without timely permission may validly be confiscated where the breach of storage discipline is established. The goods were found outside the temporary BSR, permission had been sought only on the eve of the officers' visit, and the quantity was substantial enough to support the inference of a continuing storage violation. The confiscation was therefore upheld. Although the underlying breach remained sustained, the penalty was considered excessive in the circumstances and was reduced. The appellate result thus preserved the substantive finding of non-compliance while moderating the penal consequence.

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Issues: (i) Whether tiles found outside the temporary BSR were liable to confiscation for breach of the storage requirement; (ii) Whether the penalty imposed required interference.

Issue (i): Whether tiles found outside the temporary BSR were liable to confiscation for breach of the storage requirement.

Analysis: The goods were found outside the temporary BSR without timely permission, and the quantity was substantial enough to represent roughly a month's production. The application for permission was made only on the eve of the visit by Central Excise officers. On these facts, there was no basis to disturb the finding that the goods were kept in violation of the prescribed storage discipline.

Conclusion: The confiscation was upheld.

Issue (ii): Whether the penalty imposed required interference.

Analysis: While the impugned order was otherwise sustained, the quantum of penalty was considered excessive in the circumstances and was therefore scaled down.

Conclusion: The penalty was reduced.

Final Conclusion: The substantive findings against the assessee were sustained, but the penal consequence was moderated by reducing the quantum of penalty.

Ratio Decidendi: Goods kept outside a prescribed storage area without timely permission may validly be confiscated, and the appellate forum may interfere only with the quantum of penalty where the underlying breach is sustained.

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