2008 (11) TMI 536 - AT - Central Excise

Summary

Issues:
1. Appeal against demand and penalty imposed under Rule 173Q of Central Excise Rules.
2. Discrepancy in the quantity of filter and non-filter cigarettes manufactured.
3. Adjustment of excess cigarettes found in duty paid godown against the shortage in the factory.
4. Imposition of penalty under Rule 173Q versus Section 11AC of the Central Excise Act.

Analysis:
1. The appellant appealed against the demand of Rs. 15,71,460 confirmed for cigarettes found short in the factory and the penalty imposed under Rule 173Q of Central Excise Rules. The appellant argued that the demand should be quantified based on the ratio of filter and non-filter cigarettes manufactured, claiming that certain cigarettes were found in excess in the duty paid godown, which should offset the shortage in the factory. However, the Tribunal found that the demand was calculated based on the brand of cigarettes found short in the factory, as verified by Revenue officers during the site visit. The record recovered from the office did not specify whether the cigarettes were filtered or non-filtered, and there was a discrepancy in quantities found short in the factory and in excess in the duty paid godown. Consequently, the Tribunal dismissed the appeal filed by the appellant.

2. Regarding the appeal filed by Revenue, they sought the imposition of an equal penalty under Section 11AC of the Central Excise Act, 1944, instead of the penalty imposed under Rule 173Q. The Commissioner (Appeal) had reduced the penalty, but Revenue argued for the imposition of the higher penalty. The Tribunal noted that the Adjudicating Authority did not impose a penalty under Section 11AC, and Revenue did not review that decision. As there was no penalty under Section 11AC imposed or reviewed, the Tribunal found no merit in Revenue's contention for the higher penalty. Consequently, the Tribunal dismissed the appeal filed by Revenue. Both appeals were ultimately dismissed by the Tribunal.

This comprehensive analysis covers the issues raised in the judgment, detailing the arguments presented by the parties and the Tribunal's reasoning leading to the dismissal of both appeals.