2009 (4) TMI 614 - AT - Central Excise

Summary

Issues involved: Challenge against penalty u/s 11AC upheld by Commissioner (Appeals).

Summary:

Issue 1: Challenge against penalty u/s 11AC
The Appellant, a Govt. undertaking, challenged penalty u/s 11AC imposed by the Commissioner (Appeals) for shortages of 1826 qtls. and 87 qtls. of sugar found during stock verification. The Appellant promptly reported the shortages and paid the Central Excise Duty on the quantities. The Appellant argued that there was no intention to evade duty, citing precedents where penalties were not imposed on Govt. undertakings in similar situations. The Department contended that the shortages were due to clandestine removal with officer connivance, justifying the penalty u/s 11AC.

Judgment:
After considering submissions and records, it was found that the Appellant detected the major shortage themselves and paid the duty immediately. Being a Govt. Undertaking, there was no evidence of wilful contravention to evade duty. Therefore, the penalty u/s 11AC was deemed unwarranted. The impugned order upholding the penalty was set aside, and the appeal was allowed.