Unaccounted excise goods without intent to evade duty may escape confiscation and Rule 173Q penalty, with only limited penalty remaining.

Goods found in the factory but not entered in the RG-I register were treated as unaccounted stock, but the decisive finding was that there was no intention to evade duty. On that basis, absence of mens rea was treated as defeating confiscation and penalty under Rule 173Q of the Central Excise Rules. Liability was confined to the limited penalty prescribed under Rule 226, and the confiscation and Rule 173Q penalty were set aside.

---

---

Issues: Whether goods found unaccounted in the RG-I register were liable to confiscation and penalty under Rule 173Q of the Central Excise Rules, and whether only penalty under Rule 226 of the Central Excise Rules was leviable.

Analysis: The goods were found in the factory but not entered in the RG-I register. The decisive finding accepted in the order was that there was no intention to evade duty. In that situation, the earlier Tribunal view applied that absence of mens rea negatives confiscation and penalty under Rule 173Q, while leaving open liability to the limited penalty prescribed under Rule 226.

Conclusion: Confiscation of the goods and penalty under Rule 173Q were set aside. The assessee remained liable only to penalty of Rs. 2,000 under Rule 226.

---