Mens rea is required for excise penalty where statutory record omissions do not prove clandestine removal.

Mere non-entry of finished excisable goods in statutory records was held insufficient to prove clandestine removal or justify confiscation and penalty. The Revenue had failed to adduce evidence that the goods were cleared unaccounted or kept for clandestine clearance, and the concurrent factual findings recorded no mens rea on the assessee's part. In that setting, and applying the principle that mens rea is ordinarily required for penalty under the excise rules, the High Court found no perversity in the findings below and rejected the Revenue's challenge.

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Issues: Whether mens rea is a pre-condition for confiscation and penalty in respect of unaccounted excisable goods under the applicable excise rules.

Analysis: The Revenue failed to produce evidence showing that the goods were cleared unaccounted or were kept for clandestine clearance. Mere non-entry of finished goods in the RG-1 register was held insufficient, by itself, to establish clandestine removal. The concurrent findings of the Commissioner and the Tribunal recorded that there was no mens rea on the part of the assessee to remove the goods clandestinely. In such circumstances, and in the light of the principle that mens rea is ordinarily required for imposition of penalty, the factual findings were not shown to be perverse.

Conclusion: Mens rea was treated as necessary for imposing penalty on the facts of the case, and the Revenue's challenge failed.

Ratio Decidendi: For confiscation or penalty under the excise rules, mere non-accountal in statutory records does not establish clandestine removal or justify penalty unless the Revenue proves the requisite mens rea.

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