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of <h1>Court affirms penalty for non-accounting excisable goods, no mens rea needed</h1> <h3>M/s. Dayal Alloy & Steel Castings Versus The Commissioner of Central Excise</h3> M/s. Dayal Alloy & Steel Castings Versus The Commissioner of Central Excise - 2014 (305) E.L.T. 12 (Jhar.) Issues Involved:1. Applicability of Rule 173Q of the Central Excise Rules, 1944.2. Requirement to account for excisable goods in RG-1 Register.3. Imposition of penalty and confiscation under Rule 173Q read with Rule 209.4. Mens rea (intention) requirement for invoking Rule 173Q.Issue-wise Detailed Analysis:1. Applicability of Rule 173Q of the Central Excise Rules, 1944:The High Court examined whether Rule 173Q is attracted in the absence of any intention to waive the payment of central excise duty or removal of any excisable goods. The court noted that Rule 173Q deals with confiscation and penalty if a manufacturer does not account for excisable goods or contravenes any provisions with intent to evade duty. The court emphasized that the provisions of Rule 173Q are independent, and violation of any sub-clause attracts confiscation and penalty.2. Requirement to account for excisable goods in RG-1 Register:The appellant was found with an excess stock of MS Ingots not recorded in the RG-1 Register. The court highlighted that Rule 53 mandates every manufacturer to maintain a stock account, and Rule 54 requires filing monthly returns. The appellant's contention that the goods were unfinished and not required to be entered in the RG-1 Register was dismissed as an afterthought since it was not raised in the initial show cause replies. The court also noted that the appellant's request for provisional release of the seized goods contradicted their claim that the goods were not saleable.3. Imposition of penalty and confiscation under Rule 173Q read with Rule 209:The court upheld the imposition of penalty and confiscation under Rule 173Q read with Rule 209, stating that non-accounting of goods in statutory records is a clear violation. The court clarified that Rule 173Q(1)(b) mandates confiscation if any manufacturer does not account for excisable goods, and this provision is independent of the intention to evade duty. The Tribunal's decision to reduce the redemption fine and penalty to Rs.3 lakhs each was considered lenient and upheld by the court.4. Mens rea (intention) requirement for invoking Rule 173Q:The appellant argued that mens rea (intention to evade duty) is essential for invoking Rule 173Q. However, the court rejected this argument, stating that Rule 173Q creates strict liability without proof of mens rea. The court emphasized that the language of Rule 173Q does not indicate the need to establish mens rea, and the conjunction 'or' in the rule suggests that each clause is independent. Therefore, non-accounting of manufactured goods in statutory records attracts confiscation and penalty provisions without the need to prove intent to evade duty.Conclusion:The High Court dismissed the appeal, affirming the Tribunal's order to reduce the redemption fine and penalty to Rs.3 lakhs each. The court concluded that non-accounting of excisable goods in statutory records attracts the provisions of Rule 173Q(1)(b) for confiscation and penalty, and there is no requirement to establish mens rea for invoking these provisions.
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