Unauthorised removal of excisable goods without duty payment sustains duty demand, confiscation, and Rule-based penalty, but not mandatory penalty without ingredients.

Removal of excisable goods without debiting or paying duty supports a duty demand under the central excise regime. Such unauthorised clearance also attracts confiscation and penalty under Rule 173Q, including consequences for the goods and transport vehicles, although redemption fines and the quantum of penalty may be reduced on the facts. Mandatory penalty under Section 11AC applies only where its statutory ingredients are established; on the stated record, those ingredients were not shown, so that penalty was not leviable.

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Issues: (i) whether the demand of duty could be sustained when excisable goods were removed without debiting duty; (ii) whether penalty and confiscation under the Central Excise Rules were justified and to what extent the redemption fines should be reduced; and (iii) whether mandatory penalty under Section 11AC of the Central Excise Act was attracted.

Issue (i): whether the demand of duty could be sustained when excisable goods were removed without debiting duty.

Analysis: The goods were admittedly removed from the factory without payment of duty, and the appellants did not contest the duty demand. Under the governing excise rule requiring duty to be paid before removal, such clearance remained contrary to law.

Conclusion: The demand of duty was upheld against the assessee.

Issue (ii): whether penalty and confiscation under the Central Excise Rules were justified and to what extent the redemption fines should be reduced.

Analysis: Since the goods were removed without debit of duty, penalty under Rule 173Q(1)(b) and confiscation of the goods and the trucks were held to be attracted. At the same time, the circumstances put forward by the assessee justified leniency in quantifying the punishment and redemption amounts.

Conclusion: Penalty under Rule 173Q was sustained but reduced, and the redemption fines on the goods and trucks were also reduced.

Issue (iii): whether mandatory penalty under Section 11AC of the Central Excise Act was attracted.

Analysis: The record did not disclose the statutory ingredients required for the mandatory penalty provision.

Conclusion: Penalty under Section 11AC was held not leviable.

Final Conclusion: The appeal succeeded only in part: the duty demand and confiscatory consequences were largely maintained, but the monetary penalties and redemption fines were substantially reduced, and the mandatory penalty under Section 11AC was set aside.

Ratio Decidendi: Removal of excisable goods without payment of duty justifies duty demand, confiscation, and penalty under the applicable excise rules, but mandatory penalty provisions apply only when their statutory ingredients are established.

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