2009 (5) TMI 780 - AT - Central Excise

Summary

Issues Involved:
Alleged clandestine clearances of mineral glasses without payment of duty, discrepancies in stock records, imposition of penalties for violations of statutory provisions, correctness of physical stock verification, applicability of penalty under Section 11AC of the Central Excise Act.

Analysis:

1. Alleged Clandestine Clearances and Discrepancies in Stock Records:
The case involved allegations of clandestine clearances of mineral glasses without payment of duty based on discrepancies in stock records. The officers found significant shortages in physical stock compared to the RG-I register and production summary sheets. The original authority confirmed the demand for duty and imposed penalties for contraventions. However, the appellants contested these findings, claiming inaccuracies in stock verification and production records. The Commissioner (Appeals) upheld the original order, emphasizing the shortage as evidence of suppression and clandestine clearances.

2. Correctness of Physical Stock Verification:
The appellants challenged the correctness of physical stock verification conducted by the officers. They argued that the stock position was not accurately ascertained, and discrepancies existed in the figures recorded by the officers compared to the stock verified by the appellants themselves. The appellants raised concerns about the feasibility of verifying a large quantity of fragile goods in a short time. The Commissioner (Appeals) acknowledged the possibility of verifying stock if arranged properly but did not address all concerns raised by the appellants.

3. Imposition of Penalties and Applicability of Section 11AC:
The appellants contested the imposition of penalties under Section 11AC for offenses prior to the enactment of the said section. They argued that quoting incorrect provisions of law should not warrant penalties. The appellants also challenged the sustainability of penalties for alleged violations of statutory provisions. The Tribunal found the demand for duty on clandestine clearances unsustainable due to lack of concrete evidence. While acknowledging deficiencies in maintaining statutory accounts, a nominal penalty of Rs. 1,000 was imposed, and the appeal was allowed with this penalty upheld.

In conclusion, the Tribunal set aside the demand for duty and penalties related to alleged clandestine clearances due to insufficient evidence. However, a nominal penalty was imposed for failure to maintain statutory accounts. The judgment highlighted the importance of reliable evidence in cases of clandestine clearances and emphasized the need for accurate record-keeping to comply with statutory provisions.