TMI Blog2006 (7) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... d that unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. The Apex Court held that there is nothing in Section 271(1)(a) requiring that mens rea must be proved before penalty can be levied under that provision contrasted with the provisions of Section 276C wherein the element of mens rea was required to be established before imposition of any sentence under that provision. Another judgment relevant in the context of necessity of the ingredient of mens rea is the Supreme Court's decision in the case of Indo-China Steam Navigation Co. Ltd. v. Jasjit Singh, ACC, Calcutta and Others, [ 1964 (2) TMI 1 - SUPREME COURT] holding that guilty mind is not an essential constituent of Section 52A which absolutely prohibits entry of vessels in which there is any construction, adaptation, alteration or filting made for the purpose of concealing goods. Following the ratio of the above decisions, we answer the issue referred, by holding that mens rea is not an essential ingredient to warrant confiscation and penalty under the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice together with interest imposed penalty of amount equal to duty involved on the seized finished goods and seized raw materials and penalty of Rs. 20,000/- on the senior engineer-cum-authorised signatory of the assessee, under Rule 209A. The Commissioner (Appeals) set aside the order of confiscation, holding that there was no evidence on record to establish intention on the part of the assessees to clear finished goods clandestinely and that since raw material found short was subsequently recovered at an adjoining plot of the assessee which prior to 1996 was registered with the central excise authorities as unit No. 2 of the same assessee and the assessee had surrendered its registration in 1996 and in February 2001, the assessee submitted a revised ground plan for addition of premises of the plot where the raw materials were found, the bona fide intention of the assessee was established and, therefore, the short found quantity of raw material was not removed by the assessee from their control. He reduced the penalties to Rs. 2,000/- under Rule 173Q and set aside the penalty imposed on the authorised signatory of the assessee company. The Revenue has come up in appeal aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-clause (b) refers to accounting. Here too, a manufacturer is aware of the goods manufactured by him and is to necessarily account for the same in the prescribed manner. Sub-clause (c) refers to engaging in the manufacture of excisable goods without a licence when one is required. In all these cases, knowledge is inherent in the commission or omission simpliciter. The language of these three clauses is in contrast to the language of clause (d) which refers to contravention of any of the provisions of the Rules with intent to evade payment of duty. The absence of reference to intent in clauses (a), (b) and (c) would show that intention is not material in the case of violation or contravention of the kinds referred to therein. In this context, the judgment of the Hon'ble Bombay High Court in Kirloskar Brothers Ltd. v. UOI reported in 1988 (34) E.L.T. 30 (Bom.) is very relevant. The Court held that "Firstly, the question whether one had an intention to evade excise duty is a question of fact. Secondly, clauses (a), (b) and (c) of sub-rule (1) of Rule 173Q do not admittedly use the expression "with intent to evade payment of duly", which is found in clause (d) thereof. It can, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve goods without posting the relevant entries in the statute books. When we contrast the language used in Rule 173Q(1)(d) with the language used in 173Q(1)(a), this position becomes clearer. In 173Q(1)(d) the language connects the violation of the statutory provision with an intendment to evade the excise duty. But in 173Q(1)(a) the rules use no such formula. The difference in language between the two parts of the same Rule 173Q must be taken to be deliberate. The rule seeking the protection of the public revenue proceeds on the basis that the removal of excise goods from the godowns could not be intentional and could only be with knowledge of the manufacturer. It is a sort of conclusive presumption which the legislature is competent to enact. It, therefore, dispenses with the proof [of] any mental state of the manufacturer which sometimes the devil may know not. Speaking in practical terms it would not be conceivable that the excise goods from godowns would be regularly transported without the knowledge and intention of the manufacturer. It is open for the legislature to act upon such common knowledge and hold the manufacturer absolutely liable. What is forbidden under the excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here has been any intention to break the law or otherwise to do wrong or not. There is a large body of municipal law in the present day, which is so conceived. Bye-laws are constantly made regulating the width of thoroughfares, the height of buildings, the thickness of walls, and a variety of other matters necessary for the general welfare, health or convenience, and such bye-laws are enforced by the sanction of penalties, and the breach of them constitutes an offence and is a criminal matter. In such cases, it would, generally speaking, be no answer to proceedings for infringement of the bye-law that the person committing it had bona fide made an accidental miscalculation or an erroneous measurement. The acts are properly construed as imposing the penalty when the act is done, no matter how innocently, and in such a case the substance of the enactment is that a man shall take care that the statutory direction is obeyed, and that if he fails to do so he does it at his peril. " Courts held that in discarding the guilty mind theory, the subject matter of the relevant enactment will be of vital significance. 18. Lord Russell of Kilowen, in the case of Coppen v. Morre No. 2 (1898) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act are quasi criminal in nature and that therefore the element of mens rea is a mandatory requirement before a penalty can be imposed under Section 271(1)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal. It is sufficient for us to refer to Section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income, and to Section 276C which provides that if a person wilfully fails to furnish in due time the return of income required under Section 139(1), he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine. It is clear that in the former case what it intended is a civil obligation while in the latter what is imposed is a criminal sentence. There can be no dispute that having regard to the provisions of Section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted by Act 10 of 1957. The plain construction of this section appears to be that whenever a ship answering the description contained in its first part enters or is within the limits of any port in India, or the Indian customs waters, if contravenes the prohibition prescribed by it. The prohibition is against the construction, adaptation, alteration or fitting for the purpose of concealing goods. What has to be proved against a vessel which is charged with having contravened S. 52A is that there has been a construction, adaptation, alteration or fitting, and that the said construction, adaptation, alteration or fitting has been made for the purpose of concealing goods. Therefore, if an alteration in a vessel made for the purpose of concealing goods is proved, the contravention of S. 52A must be inferred. In other words, the section prohibits absolutely the entry of vessels which show that there has been any construction, adaptation, alteration or fitting made in them for the purpose of concealing goods. 22. On the other hand, the scheme of S. 167 supports the contention of the Additional Solicitor-General that if we read Section 52A along with S. 167(12A), it would be clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomaly just indicated, while the other does not and helps the effectuation of the intention of the legislature, it would be the duty of the Court to accept the latter construction. 24. The intention of the legislature in providing for the prohibition prescribed by S. 52A is, inter alia, to put an end to illegal smuggling which has the effect of disturbing very rudely the national economy of the country. It is well known, for example, that smuggling of gold has become a serious problem in the country and operations of smuggling are conducted by operators who work on an international basis. The persons who actually carry-out the physical part of smuggling gold by one means or another are generally no more than agents and presumably, behind them stands a well-knit organisation which, for motives of profit making, undertakes this activity. That is why S. 52A makes an absolute prohibition against the entry of a vessel which contains, inter alia, any alteration made for the purpose of concealing goods. Entry of contraband gold with the help of ships has thus become a serious problem and is intended to be checked by this absolute prohibition. If it was held that the knowledge of the own ..... X X X X Extracts X X X X X X X X Extracts X X X X
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