2009 (12) TMI 808 - AT - Central Excise

Summary

Issues involved: Appeal against the order of the Commissioner (Appeals) regarding demand of duty, recovery of interest, and imposition of penalties under Rule 25 and Section 11AC.

Summary:
The case involved two appeals, one by the party and the other by the Department, against the same order of the Commissioner (Appeals). The dispute arose from a stock verification exercise conducted at the manufacturer's premises, where a shortage of finished goods was found. The original authority confirmed the duty demand, interest, and penalties, leading to appeals by both parties.

The party contended that there was no actual weighment of the stock and raised concerns about the duration of the officers' presence at the factory. The Department argued that the weighment was conducted in the presence of witnesses and the shortage was admitted, justifying the penalties imposed.

Upon review, the Tribunal found that the weighment had indeed taken place, with the Director's acknowledgment of the shortage lending credibility to the findings. However, the Tribunal noted that not every shortage amounts to clandestine removal, emphasizing the need for additional evidence to support such allegations. In this case, the Department failed to provide sufficient proof of clandestine removal, leading to the dismissal of the charge.

Consequently, the Tribunal disposed of the appeals by rejecting the Department's plea to restore the penalty under Section 11AC, upholding the duty demand with interest, and modifying the penalty under Rule 25 to a lesser amount under Rule 27 of the Central Excise Rules.