Absence of intent to evade duty can defeat personal penalty, while statutory contravention may still justify confiscation with reduced redemption fine.

Absence of intent to evade duty, once accepted by the authority, removed the basis for a personal penalty, so that penalty was set aside. However, goods kept in contravention of statutory record requirements remained liable to confiscation under Rule 173Q of the Central Excise Rules, even though the contravention was found without mala fides. The confiscation was therefore sustained, but the redemption fine was reduced in view of the absence of deliberate evasion. The principle stated is that proven statutory contravention may justify confiscation while personal penalty depends on a finding of culpable intention.

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Issues: (i) Whether personal penalty was sustainable where the authority accepted absence of intention to evade duty; (ii) Whether confiscation of goods not properly accounted for in the statutory records was warranted and, if so, whether the redemption fine required reduction.

Issue (i): Whether personal penalty was sustainable where the authority accepted absence of intention to evade duty.

Analysis: The authority below had accepted the appellants' contention that there was no intention to evade duty in relation to the goods kept in the bonded store room or removed under gate passes. Once bona fides were accepted and no deliberate evasion was found, the basis for visiting the appellants with a personal penalty was absent.

Conclusion: The personal penalty was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether confiscation of goods not properly accounted for in the statutory records was warranted and, if so, whether the redemption fine required reduction.

Analysis: Goods kept in contravention of statutory requirements were liable to confiscation under Rule 173Q of the Central Excise Rules. The reliance on the cited High Court decision was rejected as that decision concerned the pre-amendment position. However, since the contravention was found to be unaccompanied by mala fides, some leniency was considered appropriate while sustaining the confiscation.

Conclusion: Confiscation was upheld, but the redemption fine was reduced to Rs. 30,000, partly in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent of deletion of the personal penalty and reduction of the redemption fine, while confiscation of the goods was maintained.

Ratio Decidendi: Where statutory contravention is established but absence of mala fide or intent to evade duty is accepted, personal penalty may be set aside, though confiscation under the penal rule can still be sustained with moderated redemption fine.

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