Mens rea required for confiscation under Rule 173Q, while non-accountal still justified confiscation under Rule 226.

Confiscation under Rule 173Q was held unsustainable because, although non-accountal was alleged, no material showed mens rea or intent to evade duty. The explanation that the goods were pending inspection before entry in RG-1 was not substantiated, but that alone did not satisfy the requirement for confiscation under Rule 173Q. By contrast, non-accountal of excisable goods was established on the facts, so confiscation under Rule 226 was sustained. The redemption fine was nevertheless reduced to reflect the circumstances, giving the appellant only partial relief.

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Issues: (i) Whether confiscation of the seized goods under Rule 173Q was sustainable in the absence of evidence of intent to evade duty; (ii) whether confiscation and redemption fine could nevertheless be sustained under Rule 226 for non-accountal of excisable goods.

Issue (i): Whether confiscation of the seized goods under Rule 173Q was sustainable in the absence of evidence of intent to evade duty.

Analysis: The claimed basis that the goods were pending inspection before entry in RG-1 was found unsubstantiated, as the inspection certificates could not be correlated to the seized goods and the managing director's statement did not support that explanation. However, for confiscation under Rule 173Q, the finding of non-accountal had to be supported by material indicating mens rea or intention to evade duty. No such evidence was produced.

Conclusion: Confiscation under Rule 173Q was not sustainable and this part of the order went in favour of the appellant.

Issue (ii): Whether confiscation and redemption fine could nevertheless be sustained under Rule 226 for non-accountal of excisable goods.

Analysis: Non-accountal of the goods was established, and the value of the seized goods was substantial. On those facts, confiscation under Rule 226 was justified, but the quantum of redemption fine required modification in light of the circumstances.

Conclusion: Confiscation under Rule 226 was sustained, while the redemption fine was reduced to Rs. 50,000, resulting in partial relief to the appellant.

Final Conclusion: The appeal succeeded only to the extent of setting aside confiscation under Rule 173Q and reducing the redemption fine, while the remaining confiscation and penalty-related relief was maintained.

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