2000 (1) TMI 105 - AT - Central Excise

Summary

Issues Involved:
1. Whether the goods are liable to confiscation.
2. Whether penalty can be imposed under Rule 173Q of the Central Excise Rules.

Issue 1: Whether the goods are liable to confiscation.

The Jurisdictional officers found super enamelled copper wire on spools and also packed in containers not entered in the R.G. I register, leading to the seizure of the wires valued at Rs. 10,65,957.00. The Commissioner imposed a fine and penalty, which the appellants contested, claiming the goods were pending quality control tests and not yet fully manufactured. The Tribunal examined past judgments, departmental instructions, and the requirement for goods to be accounted for in the R.G. I register once reeled or rolled on drums and disconnected from the machine. The Tribunal upheld the confiscation, referencing Rule 173Q(1)(b) and Rule 226, stating non-accountal of goods warranted confiscation even without mens rea. However, the Member (Judicial) disagreed, arguing that mens rea is essential for confiscation under Rule 173Q and that the goods were not liable for confiscation without evidence of intent to evade duty.

Issue 2: Whether penalty can be imposed under Rule 173Q of the Central Excise Rules.

The Commissioner imposed a penalty under Rule 173Q, which the appellants contested, citing past practices and lack of intent to evade duty. The Tribunal noted that Rule 173Q(1)(b) covers non-accountal of excisable goods, and penalties can be imposed even without mens rea. However, the Member (Judicial) argued that Rule 173Q requires intent to evade duty for penalties and that non-accountal alone should be penalized under Rule 226, which does not require mens rea. The Member (Judicial) proposed a penalty of Rs. 2,000 under Rule 226 instead of Rule 173Q.

Majority Decision:

The third Member, P.G. Chacko, agreed with the Member (Judicial), concluding that the goods were not liable to confiscation under Rule 173Q in the absence of mens rea and that only a penalty of Rs. 2,000 could be imposed under Rule 226 for non-accountal. The majority order held that goods are not liable to confiscation and no penalty can be imposed under Rule 173Q without mens rea, but a penalty of Rs. 2,000 can be imposed under Rule 226.