Rule 25 penalty requires proof of intent to evade duty; confiscation fails without credible evidence of clandestine removal.

Confiscation, redemption fine and penalties under the Central Excise Rules were unsustainable where the department failed to prove clandestine removal or intent to evade duty. The alleged admission by the director did not establish that excess stock was kept for clandestine clearance, and the record did not address the chartered accountant's stock certificate or the explanation for temporary non-maintenance of registers. Rule 25 penalty applies only when ingredients comparable to Section 11AC are present, including fraud, suppression, wilful misstatement or deliberate evasion. In the absence of credible evidence of mens rea, the penal action was set aside in favour of the assessee.

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Issues: Whether confiscation of goods, redemption fine, and penalties under the Central Excise Rules were sustainable in the absence of credible evidence of clandestine removal or intention to evade duty.

Analysis: The authorities relied on an alleged admission by the Director, but the recorded statement did not support the finding that the excess stock was kept with an intention to remove it clandestinely. The record also did not deal with the chartered accountant's certificate regarding stock position or the explanation for the temporary non-maintenance of registers. The governing principle is that penalty under Rule 25 is attracted only when the ingredients akin to Section 11AC are present, namely fraud, suppression, wilful misstatement, or intent to evade duty. On the facts found, there was no credible evidence of deliberate evasion, and the absence of such mens rea made confiscation and penal consequences unsustainable.

Conclusion: The confiscation, redemption fine, and penalties were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The appeals succeeded because mere non-maintenance of records, without proof of intent to evade duty, could not justify confiscation or penalties under the excise penalty provisions.

Ratio Decidendi: Penal action under Rule 25 of the Central Excise Rules is unsustainable unless the department proves deliberate intent to evade duty or the other statutory ingredients comparable to Section 11AC of the Central Excise Act.

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