Non-accountal of excisable goods supports confiscation without mens rea, but penalty needs proof of intention to evade duty.

Non-accountal of excisable goods found in sealed drums constituted contravention of the stock-accounting requirement and attracted confiscation under Rule 25(b) of the Central Excise Rules, 2002 without proof of mens rea; the confiscation and redemption fine were upheld. However, penalty could not be sustained because the record did not show clear evidence of clandestine removal or a deliberate intention to evade duty. The order setting aside confiscation was reversed, while the order setting aside penalty was affirmed, resulting in partial relief for the Revenue.

---

---

Issues: (i) whether non-accountal of excisable goods found in sealed drums attracted confiscation under Rule 25(b) of the Central Excise Rules, 2002; (ii) whether penalty was imposable in the absence of evidence of intention to evade duty.

Issue (i): whether non-accountal of excisable goods found in sealed drums attracted confiscation under Rule 25(b) of the Central Excise Rules, 2002

Analysis: The goods were found unaccounted in the prescribed stock record. The fact that they were kept in sealed drums was treated as a strong circumstance indicating completion of manufacture and existence of excisable goods in a ready-to-deliver condition. Non-accountal of such goods constituted contravention of the stock-accounting requirement and attracted clause (b) of Rule 25, without requiring proof of mens rea for confiscation.

Conclusion: Confiscation was upheld and the redemption fine was sustained.

Issue (ii): whether penalty was imposable in the absence of evidence of intention to evade duty

Analysis: The record did not disclose clear evidence of clandestine removal or deliberate evasion of duty. While non-accountal justified confiscation, imposition of penalty required a culpable intention to evade payment of duty. On the facts found, the element necessary for penalty was not established.

Conclusion: Penalty was not sustainable.

Final Conclusion: The order setting aside confiscation was reversed, but the order setting aside penalty was affirmed, resulting in partial success for the Revenue.

Ratio Decidendi: Non-accountal of excisable goods can justify confiscation under Rule 25(b) of the Central Excise Rules, 2002 without proof of mens rea, but penalty requires evidence of intention to evade duty.

---