Confiscation of unaccounted excisable goods upheld; mens rea not required and penalty restoration sustained.

Unaccounted excisable goods found in the factory, lying in excess of the RG-1 balance, were liable to confiscation under Rule 173Q of the Central Excise Rules, 1944, and the absence of mens rea did not bar such action. The Tribunal held that non-accountal of goods itself attracted the confiscatory provision, and that confiscation could also be sustained even if Rule 226 was considered. It further ruled that converting the penalty under Rule 226 could not undo the confiscation order. Confiscation, redemption fine and penalty were therefore restored.

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Issues: Whether unaccounted excisable goods found in the factory could validly be confiscated and penalised under Rule 173Q of the Central Excise Rules, 1944, and whether the absence of mens rea prevented such action.

Analysis: The goods were found in excess of the balance recorded in the RG-1 register and were therefore unaccounted. The earlier authority had set aside confiscation and related consequences by applying a different precedent and by converting the penalty to Rule 226. The Tribunal held that the governing principle permits invocation of Rule 173Q in cases of non-accountal of goods and that proof of mens rea is not necessary for confiscation. It further held that, even where Rule 226 is considered, confiscation of unaccounted goods remains provided for, so the conversion of penalty could not justify disturbing the confiscation order.

Conclusion: The confiscation, redemption fine, and penalty were rightly restored and the Revenue's challenge succeeded.

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