2012 (1) TMI 42 - HC - Central Excise

Plea for restoring penalty imposed in the original order shortage of inputs found during search - duty has been paid along with admissible interest CESTAT upheld order of Commissioner(Appeals) reducing penalty - Held that - Discretion exercised by the CESTAT does not suffer from any jurisdictional error nor it violates any provision of law. Further, Revenue has not been able to point out anything from the record for taking a view different than the one taken by the CESTAT and the Commissioner (Appeals). - Decided against the Revenue.

Summary

Issues:
1. Appeal against order rejecting claim for restoration of penalty amount.
2. Discrepancy in shortage of inputs and finished goods.
3. Validity of penalty under Rule 25(1)(b) of the Central Excise Rules, 2002.
4. Jurisdictional error in CESTAT's discretion.
5. Admissibility of appeal based on substantive question of law.

Analysis:

1. The appeal under Section 35-G of the Central Excise Act, 1944 challenged the CESTAT's order rejecting the appellant-revenue's claim for restoration of the penalty amount imposed in the original order. The factual background involved discrepancies in shortage of inputs and finished goods, with separate proceedings pending for each transaction.

2. The officers of the Revenue discovered a shortage of finished goods on 03.11.2001, leading to a show cause notice for duty payment and penalty under Rule 25 of the Central Excise Rules, 2002. The original authority confirmed the duty demand and imposed a penalty equivalent to the duty amount, which was later reduced on appeal to Rs. 60,000 by the Commissioner (Appeals).

3. Both the Revenue and the assessee-respondent appealed to the CESTAT, with the Revenue seeking an enhancement of the penalty amount. The CESTAT dismissed both appeals, stating that the duty amount related to the shortage of finished goods had been paid before adjudication and there was no evidence to invoke Section 11AC of the Act. The penalty under Rule 25(1)(b) was deemed justified, and the demand for duty and interest was upheld.

4. The High Court, after hearing arguments from the appellant-revenue's counsel, found no jurisdictional error in the CESTAT's discretion. The court noted that the duty amount had been paid, and the matter regarding the shortage of inputs was under separate proceedings. Consequently, the court did not identify any substantive question of law warranting admission of the appeal.

5. Ultimately, the High Court dismissed the appeal, affirming the CESTAT's decision. As a result of the appeal's dismissal, no further orders were required concerning the application for condonation of the delay in filing the appeal.

This comprehensive analysis covers the issues raised in the legal judgment, detailing the background, proceedings, and the final decision of the High Court in the case.