Non-accounting of excisable goods can independently attract confiscation and penalty without separate proof of clandestine removal.

Rule 173Q of the Central Excise Rules, 1944 treated non-accounting of manufactured excisable goods in the statutory records as an independent ground for confiscation and penalty. Where goods were found in excess of the RG-1 balance and were not reflected in prescribed production and stock accounts, the levy was sustainable even without separate proof of mens rea or intention to clandestinely remove the goods and evade duty. The absence of proved clandestine removal did not defeat the consequence attached to non-accounting, and the confiscation, redemption fine and penalty were upheld.

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Issues: Whether penalty and confiscation under Rule 173Q of the Central Excise Rules, 1944 were sustainable for non-accounting of manufactured excisable goods in the statutory records, even in the absence of proved intention to clandestinely remove the goods and evade duty.

Analysis: The statutory scheme required the assessee to maintain prescribed production and stock accounts and monthly returns. The goods found in excess of the RG-1 balance were not accounted for in the statutory records. The language of Rule 173Q treated the relevant clauses as independent, and clause (b) fastened confiscation where excisable goods manufactured, produced or stored were not accounted for. The provision did not contain any requirement that mens rea or intention to evade duty must be separately proved for clause (b). The Court therefore held that non-accounting of manufactured goods itself attracted confiscation and penalty, and the absence of proved clandestine removal did not defeat the levy.

Conclusion: The rule was held to be attracted by the admitted non-accounting of the goods, and the challenge to confiscation, redemption fine and penalty failed.

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