2009 (3) TMI 705 - AT - Central Excise

Summary

Issues:
1. Duty demand based on clearance without payment of duty.
2. Imposition of penalties under Central Excise Rules.
3. Appeal against penalties and duty demand.

Analysis:
The case involved two appeals arising from a common order regarding the clearance of goods without payment of duty by a company engaged in manufacturing motor vehicle parts and sheet metal components. During a stock verification, central excise officers found loose slips indicating goods were cleared without duty payment. The company's Director admitted to the clearance without duty payment, leading to a demand of Rs. 1,70,098/-, which was paid by the company. The Original Authority confirmed the duty demand and imposed penalties under Rule 25 and Rule 26 of the Central Excise Rules, 2002. The Commissioner (Appeals) upheld the decision.

The appellant's advocate argued that there was no evidence of clandestine removal of goods and since the duty was already deposited before the show cause notice, the penalties should be set aside. On the other hand, the Revenue representative reiterated the findings, emphasizing the admission of clearance without duty payment by the company's representative.

After considering the arguments and evidence, the judge found that the Director's admission of goods clearance without duty payment was not retracted and that the duty was deposited before the show cause notice. As per Rule 25 of the Rules and Section 11AC of the Act, the penalty was reduced to Rs. 42,280/-, 25% of the duty amount. The judge also noted that the Director deposited the duty immediately upon detection, and there was no evidence of the involvement of another appellant in the clearance without duty payment. Consequently, the penalty on the Director was set aside.

In conclusion, the penalty in Appeal No. E/1852 of 2007 was reduced to Rs. 42,280/-, and Appeal No. E/1854 of 2007 was allowed, based on the findings that the duty was paid before the show cause notice and the lack of evidence implicating the Director in the clearance without duty payment.