2010 (5) TMI 744 - AT - Central Excise

Summary

Issues involved: Appeal against order of Commissioner (Appeals) regarding shortage of M.S. Ingots, imposition of penalty under Section 11AC, challenge to penalty without evidence of clandestine removal.

Summary:

Shortage of M.S. Ingots: During a visit to the factory, officers found a shortage of 22.900 M.Ts of M.S. Ingots. The Director of the Company confirmed the shortage, and duty was deposited. Original Authority confirmed duty demand and imposed penalty under Section 11AC. Commissioner (Appeals) upheld the order.

Challenge to Penalty: The appellant did not dispute duty liability but contested the penalty under Section 11AC, arguing no evidence of clandestine removal. The Authorised Signatory and Director admitted the shortage, but no evidence supported clandestine removal. The appellant was obligated to account for goods but shortage does not always imply clandestine removal. The show cause notice lacked evidence of clandestine removal, and no admission was made by the company's representatives.

Judgment: The appeal was disposed of by confirming duty liability and interest. The penalty under Section 11AC was converted to a penalty under Rule 25(1)(b) of the Central Excise Rules, reducing it from Rs. 52,322 to Rs. 5,000. The invocation of Section 11AC for penalty was deemed unjustified due to lack of evidence of clandestine removal, although irregular maintenance of accounts was admitted and established.

(Order dictated & pronounced in open court on 13-5-2010)