Unaccounted excisable goods in factory premises may be confiscated without mens rea under Rule 173Q, subject to remand.

Unaccounted excisable goods found in factory premises may attract confiscation under Rule 173Q of the Central Excise Rules, 1944 even without proof of mens rea. The appellate view that only Rule 226 applied was treated as inconsistent with binding precedent, which recognised confiscation where excess stock over RG-1 balance was found in the factory. The possibility that an SSI unit might claim duty exemption on excess goods intended for removal also required examination. The matter was remanded for fresh consideration in line with the governing legal position.

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Issues: Whether excess unaccounted excisable goods found in the factory were liable to confiscation under Rule 173Q of the Central Excise Rules, 1944, and whether the matter required remand for fresh consideration.

Analysis: The excess plywood/block board goods were found in the factory premises and the fact of excess stock over RG-1 balance was not disputed. The appellate authority had proceeded on the basis that only Rule 226 applied, but the order under challenge overlooked binding authority holding that confiscation under Rule 173Q could be sustained even in the absence of mens rea where excisable goods were found unaccounted in the factory. The question whether the respondents, being an SSI unit, were exempt from duty on the excess goods if intended for removal also required consideration.

Conclusion: The goods were not immune from confiscation merely because mens rea was absent, and Rule 173Q was attracted. The matter was rightly remanded for fresh decision.

Final Conclusion: The Revenue's challenge succeeded and the appellate order was set aside, with the dispute sent back for reconsideration in accordance with the governing legal position.

Ratio Decidendi: Unaccounted excisable goods found in a factory may be confiscated under Rule 173Q of the Central Excise Rules, 1944 even without proof of mens rea, and a contrary view cannot stand where binding precedent applies.

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