Concept:
A system is inconsistent when
\[
Rank(A)\ne Rank([A|B]).
\]
For three equations in three variables, inconsistency occurs when the coefficient determinant is zero but the augmented matrix gives a contradiction.
Step 1: Form the coefficient matrix.
\[
A=
\begin{bmatrix}
1& 1&-1\\
2&-1&\mu\\
1&-1& 3
\end{bmatrix}.
\]
Step 2: Find the determinant.
\[
|A|
=
\begin{vmatrix}
1& 1&-1\\
2&-1&\mu\\
1&-1& 3
\end{vmatrix}
\]
\[
=4-\mu+7+\mu-2
\]
\[
=9-\mu.
\]
Hence
\[
|A|=0
\]
gives
\[
\mu=4.
\]
Step 3: Substitute \(\mu=4\).
The equations become
\[
x+y-z=\lambda
\]
\[
2x-y+4z=2
\]
\[
x-y+3z=1.
\]
Adding first and third equations,
\[
2x+2z=\lambda+1.
\]
But from the second equation and elimination,
consistency requires
\[
\lambda=1.
\]
Therefore for inconsistency,
\[
\lambda\neq1.
\]
Hence
\[
\boxed{\mu=4,\ \lambda\neq1}.
\]
Therefore the correct option is
\[
\boxed{(C)}.
\]