Intent to evade duty is essential for confiscation and penalty under Rule 173Q in non-accountal cases.

Confiscation of finished goods and penalty under Rule 173Q for alleged non-accountal under Rules 53 and 173G could not be sustained where the show cause notice did not allege intent to evade duty. Although the finding of non-accountal was upheld because the assessee's explanation was inconsistent, mere non-accountal was held insufficient for penal action without a specific allegation and supporting finding of mens rea. The departmental conclusion on intent to evade went beyond the scope of the notice, and the confiscation and penalty were therefore not legally sustainable.

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Issues: Whether confiscation of goods and penalty under Rule 173Q of the Central Excise Rules, 1944 could be sustained for alleged non-accountal of finished goods in contravention of Rules 53 and 173G when the show cause notice did not allege intent to evade duty.

Analysis: The finding of non-accountal was upheld, as the explanation offered by the assessee was inconsistent. However, confiscation and penalty under Rule 173Q for contravention of Rules 53 and 173G required a sustaining basis for the finding that the omission was with intent to evade duty. The show cause notice contained no such allegation, and the departmental finding of mens rea therefore went beyond the scope of the notice. In the absence of an allegation and supporting basis on intent to evade, mere non-accountal was insufficient to justify confiscation and penalty under Rule 173Q.

Conclusion: Confiscation and penalty were not legally sustainable and the issue was decided in favour of the assessee.

Ratio Decidendi: For confiscation and penalty under Rule 173Q on the basis of non-accountal of goods, a specific allegation and finding of intent to evade duty is necessary; without it, the penal action cannot stand.

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