Unaccounted excisable goods attract confiscation and penalty even without mens rea; excessive penalty and redemption fine may be reduced.

Excisable goods found removed or kept unaccounted in contravention of prescribed central excise procedure were liable to duty demand and confiscation. The explanation that finished goods had been shifted to an outside godown, and that periodic RG-1 and RG 23A Part I entries were sufficient, was rejected because removal of finished goods from the factory required a central excise invoice and duty payment, and the outside godown was not treated as part of the factory. The confiscatory and penalty provisions applied to non-accounted goods, and mens rea was not required for liability under the relevant clauses. The penalty and redemption fine were found excessive and reduced.

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Issues: Whether the demand of duty, confiscation of excess goods, and penalties under the Central Excise law were justified, and whether the quantum of penalty and redemption fine required reduction.

Analysis: The shortage of finished goods and raw materials, and the excess stock found during the factory visit, were not disputed. The explanation that finished goods were transferred to an outside godown, or that accounting entries were made periodically in RG-1 and RG 23A Part I, was not accepted because removal of finished goods from the factory could lawfully occur only under central excise invoice and on payment of duty, and the outside godown could not be treated as part of the factory. The practice of periodic accounting adopted by the appellant was held to be unsupported by the Central Excise Rules. The provision governing confiscation and penalty for removal of excisable goods in contravention of the rules and for non-accounted goods was attracted, and mens rea was not held necessary for liability under the relevant clauses.

Conclusion: The demand of duty and the confiscation of goods were sustained, and the levy of penalty was upheld in principle. However, the quantum of penalty and redemption fine was found excessive and was reduced.

Final Conclusion: The appeal succeeded only to the limited extent of reduction in penalty and redemption fine, while the substantive adverse findings on duty liability and confiscation remained undisturbed.

Ratio Decidendi: Where excisable goods are found removed or kept unaccounted in contravention of the prescribed central excise procedure, confiscation and penalty can follow, and the absence of mens rea does not bar liability under the relevant confiscatory provisions.

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