2012 (4) TMI 388 - AT - Central Excise

Search at factory premises of the appellant shortages of finished goods noticed levy of demand and interest with equivalent amount of penalty u/s 11AC r.w.r. 25 of Central Excise Rules, 2002 and penalty on the partner of the assessee Held that - Invoices issued by appellant were for CTD bars of various sizes and dimensions recorded in RG-1 during the period in question - daily stock account maintained during this period the opening stock indicated 585.293 MTs which is the closing balance of stock of the finished goods on the date of visit of the officers to premises - if the appellant had taken the opening stock as the same as was on the date of visit of the officers and had cleared finished goods on payment of appropriate duty, it cannot be said that the duty liability arises - there cannot be demand of duty on the same product, one by adjudication order and another by way of discharge of appropriate duty by preparing duty paying invoices - set aside the duty liability, interest and penalty on the said amount. Shortage of waste & scrap Held that - the appellant has not produced any evidence for clearances of said waste & scrap subsequently on discharge of appropriate duty uphold the demand along with interest - the appellant is liable to be penalized under Section 11AC to the equivalent amount can discharge an amount of 25% as penalty, provided he discharges entire duty liability along with interest and 25% of the duty amount as penalty within 30 days from the receipt of order. Penalty imposed on the partner Held that - the penalty imposed on the partner is reduced from Rs.1, 50,000/- to Rs.25, 000/-

Summary

Issues:
Demand of duty on finished goods shortage
Demand of duty on waste & scrap shortage
Penalty imposition on partner

Analysis:

*Demand of duty on finished goods shortage:*
The case involved discrepancies in the stock of finished goods at the factory premises, leading to a demand for duty by the authorities. The appellant contested the shortage, arguing that they had subsequently cleared the finished goods by paying the appropriate duty, supported by invoices and daily stock accounts. The Tribunal found that the duty liability cannot be imposed twice on the same product, once through adjudication and again through payment of duty via invoices. Consequently, the Tribunal set aside the demand of duty, along with interest and penalty.

*Demand of duty on waste & scrap shortage:*
Regarding the shortage of waste and scrap in the factory premises, the appellant failed to provide evidence of clearing the said items by paying the appropriate duty. As a result, the Tribunal upheld the lower authorities' decision to confirm the demand for duty on waste and scrap shortage, along with interest. The Tribunal also imposed a penalty under Section 11AC equivalent to the duty amount, allowing the appellant to pay 25% of the penalty amount if the entire duty liability is discharged within 30 days.

*Penalty imposition on partner:*
Considering the reduction in duty liability, the penalty imposed on the partner was reduced from Rs.1,50,000 to Rs.25,000. The appeals filed by the appellant firm and its partner were disposed of accordingly, along with the Revenue's appeal.

In conclusion, the Tribunal set aside the demand of duty on finished goods shortage, upheld the demand of duty on waste & scrap shortage, and reduced the penalty imposed on the partner. The decision provided a detailed analysis of the evidence presented and the legal implications of the case, resulting in a balanced outcome for all parties involved.