Judgment:
1. These two appeals have been filed by the department. Heard the learned SDR for the department. Shri V.S. Sejpal, learned Advocate appears for M/s Modison Ltd. There is no representation for other respondents M/s Odyssey Aircon Pvt. Ltd. 2. In both the cases, the lower appellate authority has set aside the confiscation and reduced the penalty on the ground that mere non-accountal in RG-1 Register is not enough, the department must show proof of their intention to evade payment of duty. The issue as to whether intention to evade payment of duty is a necessary condition for taking action under Rule 173Q of the Central Excise Rules, 1944 in respect of non-accountal of goods was referred by the learned Single Member hearing these two appeals to the Larger Bench, and the Larger Bench has since decided the issue vide Order No. M/241 & 242/WZB/2006/SMC/C-IV dated 12.7.2006, holding that mens rea is not an essential ingredient to warrant confiscation and penalty under the provisions of Rule 173Q(1)(a), (b)&(c) of the Central Excise Rules, 1944. In the light of the Larger Bench's decision, these two appeals are now taken up for final disposal.
3. Shri V.S. Sejpal, learned Advocate points out that in these cases, though the impugned goods were not-accounted for in the RG-1 register, the same were accounted for in the other record maintained by the respondents. I find that the lower appellate authority has recorded the fact of the goods having been not accounted for in the RG-1 Register in both the cases, while observing that the impugned goods were accounted in other records. Shri Sejpal, further, states that the lower appellate authority has not waived the penalty altogether, but has imposed a lower penalty of Rs. 2000/- in both the cases. He pleads that in view of the facts and circumstances of these cases, even though mens rea is not required for imposition of penalty, still each case is to be decided exercising discretion and the lower appellate authority has rightly decided the case in not confiscating the goods and imposing a lower penalty.
4. After hearing both sides and perusal of the case records, I find that the lower appellate authority has come to a finding that the impugned goods were not totally unaccounted for and these were recorded in the other records of the respondents. Hence, he has taken a lenient view and has not ordered confiscation of the impugned goods, which is reasonable and the same does not require any interference.
5. As regards reduction in penalty, the lower appellate authority has reduced the same to Rs. 2000/- after holding that mens rea is essential to warrant confiscation and imposition of penalty under Rule 173Q(1)(b). Since his presumption regarding requirement of mens rea has been found to be not correct by the decision of the Larger Bench, I am of the view that the penalty as determined by him requires to be redetermined. Accordingly, keeping in view the entire facts and circumstances of the case, I enhance the penalty from Rs. 2000/- (rupees two thousand) to Rs. 15,000/- (rupees fifteen thousand) in respect of M/s Modison Ltd. and also enhance the penalty from Rs. 2000/- (rupees two thousand) to Rs. 5000/- (rupees five thousand) in respect of M/s Odyssey Aircon Pvt. Ltd. 7. The department's appeals are partly allowed by enhancement of the penalties as indicated above.