2011 (2) TMI 825 - AT - Central Excise

Clandestine removal - shortage of 48.473 M.T. of M.S. Ingots - The respondents in his statement recorded under Section 14 of the Central Excise Act had admitted that the quantity of M.S. Ingots found short had been removed without payment of duty and without issue of invoice and that statement has not been retracted - Moreover such a huge shortage cannot be due to mistakes in recording of weight -. Since this is a case of clandestine removal, in view of Hon ble Supreme Court s judgment in the case of Union of India vs. Rajasthan Spinning Weaving Mills (2009 -TMI - 33419 - SUPREME COURT OF INDIA), penalty under Section 11AC would be imposable irrespective of whether the duty on the goods clandestinely cleared had been paid prior to issue of show cause notice - The Revenue s appeal is allowed.

Summary

Issues:
1. Duty demand and penalty imposition for shortage of M.S. Ingots without payment of duty.
2. Ex-parte decision due to non-delivery of hearing notices.
3. Dispute over evidence of clandestine removal and penalty imposition.

Analysis:
1. The case involved a duty demand and penalty imposition against the respondent, a manufacturer of M.S. Ingots, for a shortage of 48.473 M.T. of M.S. Ingots detected during stock taking without payment of duty. The respondent's authorized signatory admitted the shortage and the manner of stock verification, leading to the duty demand confirmation and penalty imposition by the Assistant Commissioner. The Commissioner (Appeals) upheld the duty demand but set aside the penalty due to lack of evidence on whether the shortage resulted from clandestine removal or recording mistakes. The Revenue appealed against the penalty decision.

2. The hearing notices sent to the respondent were returned undelivered multiple times, resulting in an ex-parte decision concerning the respondent in the case.

3. The dispute revolved around the evidence of clandestine removal of M.S. Ingots without payment of duty. The Departmental Representative argued that the respondent's admission under Section 14 of the Central Excise Act was sufficient evidence of clandestine removal, invoking the penal provisions of Section 11AC. The Member (Technical) reviewed the records and found that the shortage was significant and admitted by the respondent's representative, indicating removal without payment of duty. The judgment referenced a Supreme Court case to support the imposition of penalty under Section 11AC for clandestine removal, regardless of prior duty payment. Consequently, the penalty set aside by the Commissioner (Appeals) was overturned, and the original duty demand and penalty were reinstated, allowing the Revenue's appeal.