Mens rea for excise penalty held to be a referable question of law under the Central Excise reference provision.

Mens rea was the central question for penalty under Rule 173Q(1)(b) of the Central Excise Rules, and the Court held that the Department's proposed question of law did arise from the Tribunal's order. That satisfied the requirement for a reference under Section 35H(1) of the Central Excise Act, 1944. The Tribunal was therefore directed to draw up the statement of case and refer the formulated question to the High Court for opinion, with the issue answered in favour of the Revenue.

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Issues: Whether the question of law, namely whether mens rea is relevant for imposing penalty under Rule 173Q(1)(b) of the Central Excise Rules, arose from the Tribunal's order so as to justify a reference under Section 35H(1) of the Central Excise Act, 1944.

Analysis: The petition sought a mandamus directing the Tribunal to draw up a statement of case and refer the formulated question of law to the High Court. On a perusal of the Tribunal's order, the Court found that the question raised by the Department did arise from the order and therefore satisfied the requirement for reference under the reference provision.

Conclusion: The issue was answered in favour of the Revenue. The petition was allowed and the Tribunal was directed to prepare the statement of the case and refer the question of law to the High Court for opinion.

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