2008 (8) TMI 712 - AT - Central Excise

Summary

Issues:
1. Duty evasion and penalty imposition on the manufacturing company.
2. Liability of the director for evasion of duty and penalty imposition.

Analysis:
1. The case involved appeals arising from a common order related to the detection of a shortage of inputs in a manufacturing company engaged in steel casting, resulting in central excise duty evasion amounting to Rs. 3,13,008/-. The director of the company admitted the shortage and paid the duty immediately. The adjudicating authority confirmed the duty demand and imposed penalties under relevant sections. The Commissioner (Appeals) later set aside the penalties, leading to the Revenue filing appeals challenging the decision.

2. Upon reviewing the case, it was established that the director of the company admitted to the shortage and the removal of inputs without payment of central excise duty, indicating clandestine removal. The invocation of Section 11AC of the Central Excise Act was deemed appropriate. Although the respondents paid the duty before the issuance of the show cause notice, the penalty was still applicable. The imposition of a penalty at 25% of the duty amount was supported by legal precedents, as seen in the case of Commissioner of Central Excise v. Malbro Appliances Pvt. Ltd.

3. The liability of the director, who was responsible for the day-to-day operations of the company, was also examined. It was found that the director was aware of the removal of goods without payment of duty, justifying the penalty imposition. However, the original penalty amount was considered excessive, leading to a reduction in the penalty imposed on the director.

4. Ultimately, the order of the Commissioner (Appeals) was set aside, and the penalties on both the company and the director were modified. The penalties were reduced to Rs. 78,000/- for the company and Rs. 20,000/- for the director, respectively, based on the circumstances and evidence presented during the case proceedings.