Bona fide accounting error defeats excise penalty where duty was voluntarily paid and no mens rea was shown.

Penalty under Rule 173Q for excess clearances caused by a bona fide accounting mistake is discussed in the note. It states that the excess arose from a double entry in the PLA against a single TR-6 deposit, and that the assessee voluntarily paid the duty and informed the department before detection. Because penalty proceedings are quasi-criminal, the text says liability requires proof of deliberate defiance or mala fide intent; a mere procedural contravention is insufficient. On that basis, it records that penalty was unwarranted in the absence of mens rea.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules, 1944 was leviable for excess clearances made because of a bona fide accounting mistake, where the assessee voluntarily deposited the duty before departmental detection and informed the revenue authorities.

Analysis: The factual matrix showed that the excess clearances resulted from a double entry in the PLA against a single TR-6 deposit. On detection of the error, the assessee made voluntary payment and addressed the matter to the Superintendent before departmental detection. Penalty proceedings being quasi-criminal in nature, liability to penalty required establishment of a guilty mind. In the absence of deliberate defiance or mala fide intention, the mere existence of a procedural contravention was not enough to sustain penalty.

Conclusion: Penalty under Rule 173Q was held to be unwarranted because the mistake was bona fide and the element of mens rea was absent, and the penalty order was quashed in favour of the assessee.

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