2002 (1) TMI 173 - AT - Central Excise

Tribunal rules no mens rea, appeal allowed in goods confiscation case under Rule 173Q.

The Tribunal allowed the appeal in a case involving the confiscation of seized goods and imposition of penalties under Rule 173Q. The lower appellate ... Accounting of excisable goods - Non-accountal of goods - Confiscation - Penalty Issues:1. Confiscation of seized goods under Rule 173Q and Rule 2262. Imposition of penalty under Rule 173Q3. Appeal against the order of the Commissioner (Appeals)Confiscation of Seized Goods under Rule 173Q and Rule 226:The case involved the confiscation of seized goods by the jurisdictional Dy. Commissioner under Rule 173Q read with Rule 226. The appellant's factory was visited by Central Excise officers who found a quantity of copper cables in excess of the recorded balance in the RG-I Register. The lower appellate authority accepted that the goods were kept for inspection by a third party and that there was no intention to remove the goods without payment of duty. However, the authority found a contravention of not accounting for the goods in the statutory records. The Commissioner (Appeals) upheld the confiscation and penalty, stating that the appellants failed to provide a satisfactory explanation for not accounting for the goods. The Tribunal noted that the contravention was not of Rule 53 alone but a cumulative contravention of Rules 53 and 173G. Referring to previous decisions, the Tribunal emphasized that mens rea is essential for invoking Clause (d) of Rule 173Q(1) for confiscation and penalty. As mens rea was ruled out by the lower appellate authority, the confiscation and penalty could not be sustained, and the appeal was allowed.Imposition of Penalty under Rule 173Q:The penalty under Rule 173Q was contested by the appellants, arguing that there was no mens rea on their part for the non-accounting of the goods. The department contended that non-accounting of finished goods, even without intent to evade duty, falls under Clause (d) of Rule 173Q(1) and does not require mens rea. The Tribunal examined the submissions and found that the lower appellate authority accepted that there was no intent to evade duty. Referring to relevant case law, the Tribunal reiterated that a contravention of Rules 53 and 173G would attract the penal provisions of Clause (d) of Rule 173Q(1) and that mens rea is necessary for confiscation and penalty under this clause. As mens rea was absent in this case, the Tribunal held that the lower authority should have set aside the penalty and allowed the appeal.Appeal against the Order of the Commissioner (Appeals):The appeal was filed against the order of the Commissioner (Appeals) who upheld the confiscation but reduced the redemption fine and penalty amounts. The Tribunal, after examining the facts and submissions, concluded that the confiscation and penalty could not be sustained due to the absence of mens rea. Therefore, the appeal was allowed, and the orders of the lower authorities were set aside.