Mens rea is essential for confiscation and penalty under Rule 173Q(1)(d) where goods were not entered in statutory records.

Non-accountal of finished goods in the statutory registers may constitute contravention of Rules 53 and 173G, but confiscation and penalty under Rule 173Q(1)(d) require mens rea. Where the authority records a finding that there was no intent to remove goods without payment of duty, the essential element for confiscation and penalty is absent. On that basis, action under Rule 173Q(1)(d) cannot be sustained and the impugned orders are set aside.

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Issues: Whether confiscation of goods and penalty could be sustained under Rule 173Q(1)(d) of the Central Excise Rules, 1944 when the non-accountal of finished goods in the statutory register was admitted but absence of intent to evade duty had been found.

Analysis: The admitted non-accountal of finished goods attracted the alleged contravention of Rules 53 and 173G of the Central Excise Rules, 1944. The lower appellate authority had nevertheless accepted that there was no intent to remove the goods without payment of duty, thereby ruling out mens rea. On the legal principle applied, a contravention of Rules 53 and 173G falls within Rule 173Q(1)(d), and mens rea is a sine qua non for confiscation and penalty under that clause. Since the finding of absence of mens rea stood recorded, the confiscation and penalty could not be sustained.

Conclusion: The confiscation and penalty were not sustainable and the appeal succeeded.

Final Conclusion: The impugned orders were set aside because the essential element required for action under Rule 173Q(1)(d) was absent on the findings recorded.

Ratio Decidendi: Where confiscation and penalty are invoked under Rule 173Q(1)(d) for non-accountal arising from contravention of Rules 53 and 173G, the presence of mens rea is essential; if absence of intent to evade duty is found, the action cannot be sustained.

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