Mens rea requirement under Central Excise penalty rule supported waiver of pre-deposit and stay of recovery.

A prima facie case for waiver of pre-deposit arose because penalty under Rule 173Q(1)(bbb) required a willful entry of wrong or incorrect particulars in an invoice with intent to facilitate inadmissible duty credit, and the challenged order recorded no finding of such intent against the applicants. In the absence of that statutory ingredient, the applicants were treated as having a strong case, and stay of recovery of the penalty was granted together with waiver of pre-deposit.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay of recovery of the penalty, in view of the requirement of mens rea under Rule 173Q(1)(bbb) of the Central Excise Rules, 1944.

Analysis: The penalty had been upheld specifically under Rule 173Q(1)(bbb), which penalises a registered dealer who willfully enters wrong or incorrect particulars in an invoice with intent to facilitate inadmissible duty credit to the buyer. The order under challenge did not record any finding bringing out such intent against the applicants. In these circumstances, and having regard to the nature of the statutory ingredient required for invocation of the rule, the applicants were found to have a strong prima facie case.

Conclusion: Waiver of pre-deposit and stay of recovery of the penalty were granted.

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