Non-accountal of excisable goods alone does not justify confiscation; penalty must stay within the limited rule-based maximum.

Mere non-accountal of excisable finished goods and raw materials in statutory records, without evidence of clandestine removal or an attempt to remove the goods surreptitiously, did not justify confiscation. The excess goods were found in the factory premises, and no loaded vehicle or other material indicated illicit removal, so confiscation was set aside. For simple non-accountal, the proper penal provision was Rule 226 of the Central Excise Rules, and the harsher confiscatory provision could not be used. The penalty was therefore reduced to the maximum permissible under Rule 226, reflecting strict construction of penal provisions and application only within their prescribed limits.

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Issues: (i) whether confiscation of excess finished goods and raw materials was justified on the facts found; (ii) whether the penalty imposed for non-accountal of goods could be sustained in the quantum imposed.

Issue (i): Whether confiscation of excess finished goods and raw materials was justified on the facts found

Analysis: The excess goods were found in the factory premises and were not entered in the statutory records, but there was no evidence of clandestine removal, no material showing an attempt to remove the goods surreptitiously, and no vehicle loaded with goods was found. On those facts, the matter was one of non-accountal only. In such a situation, the penal confiscation provision could not be invoked.

Conclusion: Confiscation of the finished goods and raw materials was not sustainable and was set aside.

Issue (ii): Whether the penalty imposed for non-accountal of goods could be sustained in the quantum imposed

Analysis: For simple non-accountal, the proper penal provision was Rule 226 of the Central Excise Rules, and not the harsher confiscatory provision. Since the maximum penalty under Rule 226 was limited, the penalty originally imposed exceeded the permissible limit and required reduction.

Conclusion: The penalty was reduced to the maximum amount permissible under Rule 226.

Final Conclusion: The appeal succeeded to the extent that confiscation was quashed and the penalty was reduced to the statutory maximum, leaving the appellant liable only to the lesser penalty for non-accountal.

Ratio Decidendi: Mere non-accountal of excisable goods in the statutory records, without evidence of clandestine removal or attempted illicit removal, does not justify confiscation or invocation of harsher penal consequences; penal provisions must be strictly construed and applied only within their prescribed limits.

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