1997 (11) TMI 329 - AT - Central Excise

Summary

Issues:
1. Non-accounting of goods in statutory records.
2. Confiscation of goods and imposition of penalty.
3. Requirement of mens rea for confiscation and penalty.
4. Justification of penalty and confiscation.

Analysis:
The case revolves around the non-accounting of goods in the statutory records by the appellant, a manufacturer of XLPE PVC power and Control Cables. During a visit by Central Excise officers, it was discovered that 13 drums of cables, valued at Rs. 7,91,575.00, were not entered in the records. The Collector adjudicated the case, confiscating the goods under Rules 173 and 209 of the Central Excise Rules, with an option for redemption on payment of a fine of Rs. 35,000.00 and imposition of a penalty of Rs. 5,000.00.

During the hearing, the Director of the appellant firm argued that the goods were intended for supply to a specific customer, the Mysore State Electricity Board, and had not been removed without payment of duty. He contended that the necessary tests and inspections were pending, and hence, the appeal should be allowed.

The Departmental Representative highlighted the lack of mens rea requirement under Rule 173Q(1)(b) for confiscation and penalty. He argued that since the goods were packed and ready for removal, the penalty and confiscation were justified, considering the significant value of the goods involved.

In the judgment, the Judge considered the arguments from both sides and reviewed the relevant legal provisions and precedents. While acknowledging the absence of mens rea requirement for confiscation under Rule 173Q(1)(b), the Judge found that the appellant's explanation for not accounting for the goods was unsatisfactory. However, considering the circumstances and the value of the goods, the Judge set aside the confiscation but reduced the penalty to Rs. 2,000.00, emphasizing that a token penalty was warranted to serve the ends of justice.

In conclusion, the appeal was partly allowed, with the confiscation of goods overturned, and the penalty reduced to Rs. 2,000.00. The judgment highlighted the importance of maintaining accurate records and the imposition of penalties even in the absence of mens rea in certain cases to uphold compliance with statutory requirements.