2010 (3) TMI 949 - AT - Central Excise

Summary

Issues Involved:
The issue involves the imposition of penalty under Section 11AC u/s the Central Excise Act on a respondent for shortage of raw materials found during a visit to their factory premises.

Summary:
The Department filed an appeal against the order of the Commissioner (Appeals) seeking imposition of penalty under Section 11AC for the shortage of raw materials found at the factory premises of the respondent-company. The Original Authority confirmed the demand of duty along with interest but did not impose any penalty. The Commissioner (Appeals) rejected the Department's appeal, leading to the Department filing an appeal against the concurrent findings of both authorities regarding the penalty imposition.

The Tribunal considered the submissions from both sides and noted that the shortage of raw materials was discovered during a visit, with no details provided in the show cause notice or reply regarding the stock records to assess the significance of the shortage. The Tribunal accepted the respondent's argument that the shortage may have been accumulated over time due to various reasons. While the liability to pay excise duty and interest on the shortages was acknowledged, the Tribunal found no evidence to support the Department's claim of clandestine removal to impose penalty under Section 11AC. As there was no evidence of clandestine removal and the show cause notice did not indicate the stock of inputs as per records, the Tribunal upheld the decision of the lower authorities in not imposing a penalty against the respondent.

Therefore, the appeal by the Department was rejected, and the Tribunal upheld the decision of the Original Authority and the Commissioner (Appeals) against imposing a penalty on the respondent for the shortage of raw materials.

(Order dictated and pronounced in open court on 9-3-2010)