2014 (6) TMI 388 - AT - Central Excise

Confiscation of goods - Mens rea - Clandestine removal of goods - Penalty - Whether mens-rea is a pre-condition for confiscation of unaccounted exciseable goods under Rule 173Q (a), (b), (c) of erstwhile Central Excise Rules, 1944 and present Rule 25 (a), (b), (c) of Central Excise Rules, 2002 - Held that - element of mens rea is normally required to be shown for imposition of penalty. - Department has failed to prove the element of mens rea for imposition of penalty. It has been so held by the Commissioner as well as the Tribunal that no case was made out to impose penalty. The finding recorded that no case was made out for imposition of penalty is not shown in any manner to be perverse - if there is no intention or suggestive of intention to remove the goods clandestinely, the same cannot be confiscated - decided in favour of assessee.

Summary

Issues:
- Confiscation of excess finished goods
- Imposition of penalties on the main appellant and individual appellant

Confiscation of Excess Finished Goods:
The case involved M/s. Union Quality Plastics Ltd., where excess finished goods were found unrecorded during a stock check. The central excise officers seized the goods provisionally and later proposed confiscation and penalties. The main appellant's factory was sealed by the bank due to non-payment, leading to the unaccounted stock. The main appellant argued no intention to evade duty, citing past judgments. The department argued unaccounted goods led to confiscation and penalties. The judge noted the factory sealing and de-sealing dates, emphasizing no evidence of clandestine removal intention. Referring to relevant case laws, the judge concluded that without intent to evade duty, confiscation was not justified.

Imposition of Penalties:
The main issue was whether penalties were justified. The judge referenced the High Court judgments emphasizing mens rea for penalty imposition. It was highlighted that the department failed to prove mens rea for penalties. The judge concluded that no intention to remove goods clandestinely was proven, aligning with the legal requirement for penalty imposition. Following the legal precedents, the judge set aside the impugned orders, allowing the appeals with consequential relief. The judgment was pronounced on 09.06.2014 by Mr. M.V. Ravindran at the Appellate Tribunal CESTAT AHMEDABAD, citing relevant case laws and factual considerations to reach the decision.