Non-accountal of excisable goods and mens rea shaped penalty exposure and led to only partial stay relief.

Non-accountal of excisable goods in RG 1 was treated as a contravention attracting penalty under Rule 173Q, with the higher court precedent regarded as prevailing over the Tribunal view and the merits understood in favour of the Revenue. On the interim issue, the absence of any allegation or finding of mens rea, together with the explanation that the goods were lying in the factory and no clandestine intent was shown, supported a strong prima facie case on penalty quantum. Partial relief was therefore granted: pre-deposit and recovery were waived only for the penalty amount exceeding Rs. 25,000.

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Issues: (i) Whether non-accountal of excisable goods in the RG 1 register attracted penalty under Rule 173Q of the Central Excise Rules, 1944 and whether the binding precedent on the point favoured the Revenue; (ii) whether the absence of any allegation or finding of mens rea, along with the surrounding facts, justified waiver of pre-deposit and stay of recovery beyond the amount directed.

Issue (i): Whether non-accountal of excisable goods in the RG 1 register attracted penalty under Rule 173Q of the Central Excise Rules, 1944 and whether the binding precedent on the point favoured the Revenue.

Analysis: The unaccounted stock of sugar was found during factory verification and the Department treated the omission as contravention attracting penalty. Competing decisions were noted, one supporting the assessee and another supporting the Revenue. The higher court decision was treated as prevailing over the Tribunal view.

Conclusion: The legal position on merits was taken to be in favour of the Revenue.

Issue (ii): Whether the absence of any allegation or finding of mens rea, along with the surrounding facts, justified waiver of pre-deposit and stay of recovery beyond the amount directed.

Analysis: The penalty provision allowed a wide range from the statutory minimum to a multiple of the value of the goods, requiring the authority to exercise discretion on the facts of the case. The absence of any allegation or finding of mens rea, the explanation that the goods were lying in the factory, and the absence of clandestine intent were treated as material factors. On that basis, a strong prima facie case was found on the question of penalty quantum.

Conclusion: Waiver of pre-deposit and stay of recovery were granted for the penalty amount in excess of Rs. 25,000.

Final Conclusion: The order granted only partial interim relief, leaving the assessee with a limited pre-deposit obligation while protecting it from recovery of the balance penalty during the pendency of the matter.

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