2003 (3) TMI 592 - AT - Central Excise

Summary

Issues:
1. Shortage of goods found during stock-taking leading to a case of clandestine removal of goods.
2. Imposition of penalties under Section 11AC and Rule 173Q of the Central Excise Act.
3. Discrepancy in penalty amount imposed on the appellants.

Analysis:
1. The case revolved around a shortage of 12,556 automotive headlamps found during a stock-taking exercise at the factory of the appellants, who were manufacturers of such lamps. The authorized signatory acknowledged the discrepancy in stock and provided explanations, including the entry of only packed goods in the register. The Department alleged clandestine removal of goods and issued a show-cause notice for duty recovery and penalties. The Adjudicating Authority confirmed the duty demand and penalties, leading to appeals by the aggrieved parties.

2. In the appeals, the Commissioner (Appeals) set aside certain penalties but upheld the duty demand and a penalty of Rs. 50,000. The appellants contested the allegation of clandestine removal, arguing that the unaccounted goods were meant for export and not cleared for home consumption. The Counsel emphasized the need for positive evidence to confirm duty liability and penalty imposition, questioning the high penalty amount under Rule 173Q.

3. The Tribunal examined the statements and submissions from both sides. It noted that only packed goods were entered in the register, and the shortage of goods found was not adequately explained by the appellants. The subsequent explanations lacked credibility, as the unaccounted goods were not mentioned to be in packed condition. The Tribunal upheld the duty demand, requiring the appellants to pay excise duty on the quantity of missing automotive headlamps. Regarding the penalty under Rule 173Q, the Tribunal found the imposed amount disproportionate and modified it to Rs. 30,000, aligning it more closely with the offense committed. The Tribunal affirmed the decision with the penalty modification, disposing of the appeal accordingly.