2009 (10) TMI 702 - AT - Central Excise

Summary

Issues involved: Appeal by Department against order of Commissioner (Appeals) regarding shortage of goods and imposition of penalty under Section 11AC.

Summary:
The case involved the Department appealing against the order of the Commissioner (Appeals) regarding a shortage of goods found during a visit to the factory premises of the respondent. The officers found a shortage of 5073.400 kgs of excisable goods, leading to the payment of duty by the party. The original authority confirmed the duty demand and imposed a penalty under Section 11AC, which was set aside by the Commissioner (Appeals).

The Department argued that the shortage should be treated as a case of clandestine removal, justifying the imposition of penalty under Section 11AC. On the other hand, the respondents contended that the shortage was a small quantity compared to the total, and the payment of duty should not be seen as clandestine clearance. They cited a relevant court decision to support their stance.

After considering the submissions, it was noted that the duty liability had been discharged, and the dispute centered on the applicability of Section 11AC. The lack of evidence of goods removal and the seriousness of the charge of clandestine removal were highlighted. While the decision to not uphold the penalty was deemed justified, the reasoning of the Commissioner (Appeals) was questioned due to subsequent case laws.

Ultimately, the appeal by the Department was rejected, affirming the decision of the Commissioner (Appeals) regarding the penalty imposition under Section 11AC.