2006 (11) TMI 433 - AT - Central Excise

Summary

Issues Involved:
1. Confiscation of excess zinc ingots.
2. Imposition of penalty.
3. Requirement of mens rea for confiscation and penalty.

Summary:

Issue 1: Confiscation of Excess Zinc Ingots
The appellant company, engaged in manufacturing zinc ingots and zinc ash, was found with an excess of 28,277 kgs of zinc ingots during a surprise visit by excise officers. The excess stock of 1088 zinc ingots weighing 26,117 kgs was seized under a panchnama. The appellant contended that the excess was due to a clerical mistake and that the ingots were not in a finished condition, requiring testing for purity. The adjudicating authority found discrepancies between the production details and the RG-1 register, leading to the confiscation of the unrecorded zinc ingots valued at Rs. 18,97,661/- u/r 173Q of the Central Excise Rules, 1944. The Commissioner (Appeals) upheld the confiscation, rejecting the appellant's explanation and confirming that the excess stock should have been entered in the RG-1 register.

Issue 2: Imposition of Penalty
The adjudicating authority imposed a penalty of Rs. 50,000/- u/r 173Q for contravention of Rules 9(1), 52A, 53, and 173G of the Central Excise Rules, 1944. The Commissioner (Appeals) reduced the penalty to Rs. 20,000/-, observing that there was no allegation of intent to evade duty or evidence of an attempt to remove the goods without payment of duty. The appellant argued that the penalty was excessive given the lack of intent to evade duty and that the non-entry in the RG-1 register was a clerical mistake.

Issue 3: Requirement of Mens Rea for Confiscation and Penalty
The appellant contended that mens rea was required for confiscation and penalty under Rule 173Q(1)(d), which necessitates an intention to evade duty. The Commissioner (Appeals) relied on the Bombay High Court's decision in Kirloskar Brothers v. Union of India, which held that clauses (a), (b), and (c) of Rule 173Q(1) do not depend on mens rea. The Tribunal upheld this view, noting that the appellant failed to account for the excess stock, justifying the confiscation and penalty. The Tribunal dismissed the appeal, affirming the impugned order.

Conclusion:
The appeal was dismissed, and the confiscation of excess zinc ingots and the reduced penalty of Rs. 20,000/- were upheld. The Tribunal found no merit in the appellant's contentions regarding clerical mistakes and the requirement of mens rea for confiscation and penalty.