2012 (7) TMI 605 - AT - Central Excise

Penalty - Clandestine removal of goods - shortage of input in comparison to the balance shown in the Cenvat Credit Register - appellant had paid the duty on the said shortage Held that - Admission of shortage cannot be straightway taken as admission of clandestine removal -charge of clandestine removal is a serious charge which is required to be proved by reliable evidence - stock found short could not be considered as a case of clandestine removal unless supported by any other corroborative evidence

Summary

Issues:
1. Shortage of copper wire and strip in the appellant's factory.
2. Imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.
3. Appeal against the order confirming duty and penalty.
4. Dispute regarding the explanation for the shortage and imposition of penalty.

Analysis:
1. The case involves a shortage of 2612 Kgs. of copper wire and strip in the appellant's factory during a physical verification. The appellant admitted the shortage, attributing it to inadvertent error. The duty on the shortage was discharged before a show cause notice was issued, but penalty was proposed. The appellant contended that the shortage was accounted for in production, emphasizing it was an accounting error, not suppression.

2. The imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 was challenged. The appellant argued against the penalty, citing lack of suppression, misstatement, or misdeclaration. The appellant's advocate relied on tribunal judgments to support their case, emphasizing the absence of Section 11AC elements.

3. The appeal was filed against the order confirming duty and penalty. The appellant's advocate disputed the reliance on a Supreme Court judgment, asserting that the penalty was unwarranted. The appellant's position was that the shortage was explained and duly accounted for, and there was no suppression or misdeclaration.

4. The dispute centered on the explanation for the shortage and the subsequent imposition of penalty. The appellant's advocate argued that the shortage was an accounting error, supported by records. The department contended that the shortage indicated suppression, justifying the penalty. The Tribunal, after considering both sides, found the explanation provided by the appellant to be reasonable and based on records. The Tribunal emphasized the need for corroborative evidence to establish clandestine removal, ultimately allowing the appeal to the extent of penalty imposition.