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2016 (12) TMI 1622 - AT - Central ExciseClandestine removal - shortage of finished goods and inputs - It was alleged that during the period 12/08/2008 to 30/11/2008, appellant No.1 removed the finished goods clandestinely, involving the amount of duty of ₹ 8,87,384/- under the cover of 48 challans recovered from the premises of the appellant company without payment of duty - Held that - the appellants have not given any explanation in respect of recovery of 48 challans from their premises. The demand of duty on this issue is justified. Regarding the shortage of finished goods and inputs, the Ld. Counsel submitted that the shortage is 0.19% of the inputs and 0.39% of the finished goods, which is mere burning loss - the Director of the appellant company admitted the shortage of the stock and no explanation was given. Penalty - Held that - the appellant No. 2 admitted in his statements of his knowledge of clandestine removal of the goods - imposition of penalty justified - however, quantum of penalty reduced to ₹ 50,000/-. Appeal allowed - decided partly in favor of appellant.
Issues:
1. Duty demand on shortage of finished goods and inputs. 2. Imposition of penalty on the appellants. 3. Rejection of appeals by the Commissioner (Appeals). Analysis: 1. Duty Demand on Shortage of Finished Goods and Inputs: The case involved the clandestine removal of finished goods and inputs by the appellant company, detected during a search by Central Excise officers. The demand of duty amounting to &8377; 11,10,228/- along with interest was confirmed by the adjudicating authority. The Commissioner (Appeals) upheld this decision. The appellant argued that there was no conclusive proof of clandestine removal as the recovered challans were not directly linked to them. However, the Tribunal found that the recovered challans were indeed from the appellant's premises, and the Director of the company admitted to non-payment of central excise duty against clearances. The Tribunal held that the demand of duty on the shortage of goods was justified, as the appellant failed to provide a satisfactory explanation for the discrepancies. 2. Imposition of Penalty on the Appellants: The adjudicating authority imposed penalties on both appellant No.1 (the company) and appellant No.2 (the Director) in line with the duty demand. The penalty on appellant No.1 was equal to the duty amount, while appellant No.2 was penalized &8377; 2,90,000/-. The Tribunal noted that appellant No.2 admitted knowledge of the clandestine removal and had voluntarily paid &8377; 8,00,000/- during the investigation. Therefore, the imposition of penalty on appellant No.2 was deemed justified. However, considering the circumstances, the Tribunal reduced the penalty on appellant No.2 to &8377; 50,000/-. 3. Rejection of Appeals by the Commissioner (Appeals): Both appellants had appealed the decisions of the lower authorities, but the Commissioner (Appeals) rejected their appeals. Subsequently, the appellants approached the Tribunal. The Tribunal, after considering the arguments from both sides and examining the evidence, upheld the duty demand on the shortage of goods and inputs. The appeal filed by appellant No.1 was rejected, while the penalty imposed on appellant No.2 was reduced to &8377; 50,000/-. The decision was pronounced on 29/12/2016 by Shri P.K. Choudhary, Judicial Member of the Appellate Tribunal CESTAT Kolkata.
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