2011 (1) TMI 279 - HC - Central Excise

Demand of duty and penalty under Rule 25 of the Central Excise Rules, 2002 - Whether Section 11A 2(B) is applicable when duty is debited by an assessee on detection of shortage of excisable goods by the department - the Commissioner (Appeals) recorded a finding of clandestine removal and though the assessee in appeal against the said order challenged levy of penalty, there is nothing to show that the appellant objected to setting aside of the penalty by showing that shortage of stock was attributable to intention to evade payment of duty - In absence of the contention being raised before the Tribunal, do not consider it necessary to go into that question - The amount of penalty involved is not very heavy - Accordingly, we are unable to hold that any substantial question of law arises - The appeal is accordingly dismissed.

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise & Service Tax Appellate Tribunal.
2. Levy of penalty under Rule 25 of the Central Excise Rules, 2002.
3. Interpretation of Section 11A(2B) regarding duty debited on detection of shortage of excisable goods.
4. Applicability of penalty under Section 25 of the Central Excise Act, 1944 when duty is debited due to shortage in final products.

Analysis:
1. The appeal was filed by the revenue challenging the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The case involved the appellant, a manufacturer of Joist/Girders/TMT Bars, who faced a shortage of stock during a search conducted at their premises. The adjudicating authority raised a demand of duty and imposed a penalty under Rule 25 of the Central Excise Rules, 2002. The Tribunal set aside the penalty considering the payment made under Section 11A(2B). However, the revenue contended that penalty could still be imposed under Explanation I if duty evasion was intentional, citing the Supreme Court judgment in Union of India v. Rajasthan Spinning & Weaving Mills, (2009) 13 SCC 448.

2. The court examined the arguments presented by the revenue and held that while mere payment does not automatically bar the imposition of penalty under Explanation I to Section 11A(2B), the appellant did not raise this argument before the Tribunal. As a result, the Tribunal did not address this aspect. The Commissioner (Appeals) had found evidence of clandestine removal, but the appellant did not challenge the penalty setting aside by demonstrating that the stock shortage was due to an intention to evade duty payment. Since this was a factual matter not raised before the Tribunal, the court found it unnecessary to delve into it. Given the relatively low amount of penalty involved and the lack of a substantial legal question, the court dismissed the appeal.

3. In conclusion, the court dismissed the appeal filed by the revenue, emphasizing that the mere payment of duty does not automatically preclude the imposition of a penalty under certain circumstances outlined in the law. The court highlighted the importance of raising relevant contentions before the Tribunal to ensure all aspects of the case are considered. The judgment underscored the significance of addressing factual matters and legal arguments at the appropriate stages of the legal process to enable a comprehensive review of the case.

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