Confiscation for clandestine excise clearance upheld; penalty sustained, redemption fine reduced, and notice competence challenge rejected.

Confiscation of excisable goods cleared without duty on the basis of a fake invoice was justified, and the associated penalty was sustained, because the invoice was not genuine and later payment entries did not change the nature of the clearance. Rule 173Q could be invoked for clandestine clearance or non-accountal even without proof of mens rea. The redemption fine was reduced because the duty element and subsequent payment were relevant to its quantum. The objection to the show cause notice was rejected as the issuing officer was prima facie competent and no prejudice was shown.

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Issues: (i) whether confiscation of excisable goods and imposition of penalty were sustainable where the goods were cleared without duty on the basis of a fake invoice and were found in the appellants' premises; (ii) whether the redemption fine required reduction in the facts of the case; (iii) whether the show cause notice was invalid for want of competence.

Issue (i): whether confiscation of excisable goods and imposition of penalty were sustainable where the goods were cleared without duty on the basis of a fake invoice and were found in the appellants' premises.

Analysis: The goods were found to have been cleared without payment of duty by the manufacturer, and the invoice relied upon by the appellants was not genuine. Payment of the price and later debit entry by the supplier did not alter the character of the clearance. Confiscation was therefore justified. The plea that Rule 173Q could not be invoked in a case of non-accountal was rejected, as confiscation under that rule is permissible even without proof of mens rea.

Conclusion: The confiscation and penalty were upheld as valid.

Issue (ii): whether the redemption fine required reduction in the facts of the case.

Analysis: The duty involved and the fact that duty was subsequently paid were considered relevant to the quantum of redemption fine. On that basis, the fine was found to be excessive and warranted moderation.

Conclusion: The redemption fine was reduced.

Issue (iii): whether the show cause notice was invalid for want of competence.

Analysis: The objection was not raised in reply to the notice, the issuing officer was prima facie competent as an excise officer, and no prejudice to the appellants was shown from the issuance of notice or the subsequent hearings.

Conclusion: The challenge to the competence of the show cause notice was rejected.

Final Conclusion: The impugned order was sustained except for reduction of the redemption fine, while the confiscation and penalty remained undisturbed.

Ratio Decidendi: Confiscation under Rule 173Q can be sustained for clandestine clearance or non-accountal of excisable goods even without proof of mens rea, and the quantum of redemption fine may be moderated on the facts.

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