RG-1 register lapse treated as clerical error; confiscation and harsh penalties unwarranted absent mens rea

Non-entry of goods in the RG-1 register was treated as a clerical lapse, not evidence of clandestine removal, because the goods were found within the factory and mens rea was not established. On that basis, confiscation, redemption fine, and penalty under Rule 173Q of the Central Excise Rules, 1944 were found unwarranted. The register irregularity still attracted a limited statutory penalty under Rule 226, reflecting that procedural non-compliance could be penalised even without the harsher consequences reserved for deliberate evasion.

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Issues: Whether confiscation of the goods, redemption fine, and penalty under Rule 173Q of the Central Excise Rules, 1944 were sustainable when the alleged lapse was non-entry of goods in the RG-1 register and mens rea was not established.

Analysis: The goods were found within the factory and there was no attempt to remove them clandestinely. The substantive basis for the adverse action was failure to make entries in the RG-1 register, which was treated as a clerical lapse rather than a deliberate evasion of duty. In the absence of mens rea, the stringent consequences of confiscation, redemption fine, and penalty under Rule 173Q were held to be unwarranted. At the same time, the lapse in not entering the goods in the statutory register attracted a limited penalty under Rule 226.

Conclusion: Confiscation, redemption fine, and penalty under Rule 173Q were set aside, while a penalty of Rs. 2,000 under Rule 226 was sustained.

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