The offence is drawn fairly broadly because the only alternative to drawing it broadly and then providing for appropriate exemptions is to insert some sort of specific intent, which would make it very difficult to prove an intent to conceal the identity of the vehicle. That is the primary concern here. Inserting that sort of intent would make it very difficult to prove, so we've drawn it fairly broadly.
The exemptions come in two ways. The exception in proposed subsection 353.1(3) does not really limit the lawful excuse; it goes at it in a slightly different way. It simply says that despite the broad range of the activity set out in proposed subsection 353.1(1), it does not extend. It is not intended that this offence extend to those actions that result in a VIN being altered or removed in the course of regular maintenance or repair, including modification. The lawful excuse, however, will remain for any other case in which the person charged can give some explanation for the action that would convince a court that there was a lawful excuse. One doesn't limit the other, and they have the effect of making it clear what the intended and the effective scope of the offence is.