Non-accountal of manufactured goods justifies confiscation and penalty under Central Excise rules, even without mens rea.

Non-accountal of manufactured textile goods in the statutory register was treated as sufficient to render them liable to confiscation under the Central Excise Rules. The explanation that the goods were awaiting buyer approval or had been entered elsewhere was rejected because there was no legal basis for keeping manufactured goods unrecorded in the relevant register. In cases of non-accountal, confiscation and penalty could be sustained without proof of mens rea, and the appellate authority's contrary reduction was held unsustainable. The confiscation and penalty were restored in substance, with only the redemption fine and penalty moderated.

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Issues: (i) Whether the seized textile goods, found unrecorded in the statutory register, were liable to confiscation under Rule 173Q of the Central Excise Rules. (ii) Whether the reduction of penalty and setting aside of confiscation by the appellate authority was sustainable in the facts of the case.

Issue (i): Whether the seized textile goods, found unrecorded in the statutory register, were liable to confiscation under Rule 173Q of the Central Excise Rules.

Analysis: The record established non-accountal of the manufactured goods in the relevant statutory record. The explanation that the goods were awaiting buyer approval or were entered in another register was not accepted, and there was no legal requirement permitting manufactured goods to remain unentered in the statutory register until such approval. The goods were, therefore, treated as not accounted for in law.

Conclusion: Confiscation of the goods was justified and the challenge to confiscation failed.

Issue (ii): Whether the reduction of penalty and setting aside of confiscation by the appellate authority was sustainable in the facts of the case.

Analysis: In a case of non-accountal of goods, Rule 173Q could be invoked even without proof of mens rea. The appellate authority's reliance on a Tribunal decision was held inappropriate in view of the contrary High Court view, and the appellate authority had also failed to consider the confiscatory effect of Rule 226 in a case of non-accountal. The reduction of penalty was also unsupported by sufficient reasons after a finding of non-accountal.

Conclusion: The appellate order could not be sustained, and the restoration of the adjudication order with modified redemption fine and penalty was upheld.

Final Conclusion: The Revenue's challenge succeeded, the confiscation and penalty findings against the assessee were restored in substance, and only the quantum of redemption fine and penalty was moderated.

Ratio Decidendi: Non-accountal of manufactured goods in the statutory record attracts confiscation and penalty under the Central Excise Rules, and such action can be sustained even in the absence of mens rea.

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