(1) Subject to the provisions of section 11AC of the Act, if any manufacturer produces or removes notified goods in contravention of any provision of these rules, then all such goods shall be liable to confiscation, and the manufacturer shall be liable to a penalty not exceeding the duty leviable on the notified goods in respect of which aforesaid contravention has been committed.

Provided that in case of contraventions involving non-declaration of number of packing machines available in the premises of a manufacturer, the duty leviable in respect of such undeclared packing machines shall be determined on the basis of total number of undeclared packing machines found available in the premises, the highest retail sale price of the pouches manufactured with the aid of undeclared packing machines and the rate of duty per packing machine corresponding to the higher maximum packing speed as specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 42/2008-CE dated the 1st July, 2008

(2) If it is found that goods have been manufactured in or cleared from a unit which is not registered with the jurisdictional Central Excise Office, then the duty liability of such unit shall be determined on the basis of number of packing machines found available in the 4[premises of the unit, the retail sale price of the pouches manufactured with the aid of such packing machines and the rate of duty per packing machine corresponding to the highest maximum packing speed as specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 42/2008-CE dated the 1st July, 2008 and unless] evidence to the contrary is provided to the satisfaction of the Central Excise Officer, such machines shall be deemed to have been in operation since the 2[the 1st day of April of the financial year in which unit was found to be not registered] and shall be construed as operating packing machines for the purposes of rule 7 and dealt with accordingly.