2009 (9) TMI 867 - AT - Central Excise

Summary

Issues involved: Appeal against order demanding duty, interest, and penalty under Section 11AC u/s Rule 27 of Central Excise Rules.

Summary:
The appeal was filed against the order confirming the demand of duty, interest, and penalty under Section 11AC. The appellant's factory premises were visited by Central Excise Officers who found a shortage of man-made fabrics. The General Manager explained the shortage was due to clerical errors and voluntary payment of duty was made. A show cause notice was issued, and the original authority confirmed the demand and penalty. The Commissioner (Appeals) upheld the decision.

The appellant argued that there was no evidence of clandestine removal, attributing the shortage to clerical mistakes. They contended that the demand was unjustified and the extended limitation period was not warranted. The appellant also disputed the imposition of mandatory penalty under Section 11AC without evidence of clandestine removal.

The respondent reiterated the findings, stating the shortage indicated possible clandestine removal due to discrepancies in production and clearance records. The appellant admitted the shortage and paid duty voluntarily. The Tribunal noted the obligation to account for finished goods strictly and that duty had already been paid. However, the allegation of clandestine removal required proper investigation and evidence, which was lacking in this case.

The Tribunal rejected the appeal regarding duty demand and interest recovery but modified the penalty imposed under Section 11AC to a lesser amount under Rule 27 of the Central Excise Rules. The appeal was disposed of accordingly.