2013 (11) TMI 1219 - AT - Central Excise

Imposition of Penalty u/s 11AC of Central Excise Act,1944 - Shortage of stock Assessee accepted the said shortage in the stock and agreed to discharge the duty Held that - The contention of the assessee accepted that the shortages could be on account of various factors, including the practice of determining the weight on applying average weight of each bundle - In absence of cogent evidences or admission of removal of goods clandestinely from the factory without payment of duty, the ingredients of Section 11AC of the Central Excise Act. 1944, are not attracted - Penalty has not been proposed under other provisions of Central Excise Act or the Rules made thereunder, except under Section 11AC of the CEA,1944 - as penalty is not imposable under Section 11AC of CEA,1944 and in absence of proposal of penalty under any other penal provisions, thus, no penalty could be imposed on the Appellant for the shortage order set aside to the extent of confirmation of Penalty Decided partly in favour of Assessee.

Summary

Issues:
Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The appeal was filed against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Kolkata. The case involved a shortage of 48.280 MT of finished goods in the factory's physical stock compared to the entry in the Daily Stock Account. The appellant accepted the shortage and paid the applicable Central Excise duty, along with a penalty under Section 11AC of the Central Excise Act, 1944. The main issue disputed in the appeal was the imposition of the penalty under Section 11AC. The appellant argued that the shortage was due to the method of calculating the weight of bundles, and there was no evidence of clandestine removal of goods without payment of duty. The appellant relied on previous tribunal judgments to support their case.

The Advocate for the Appellant contended that the penalty under Section 11AC was unwarranted and unjustified due to the absence of evidence of clandestine removal of goods. The Advocate highlighted that the shortage was due to the method of calculating bundle weights and that the duty was paid to avoid further litigation. The Advocate referenced tribunal judgments to support the argument that penalty under Section 11AC was not applicable without evidence of removal without duty payment.

On the other hand, the Revenue's representative argued that since the appellant could not account for the shortage and paid duty on the shortages, it indicated clearance of goods clandestinely without duty payment. The Revenue relied on tribunal judgments to support the imposition of the penalty under Section 11AC. The Revenue contended that the shortage was due to goods being removed from the factory without payment of duty.

After hearing both sides, the Tribunal found that the shortage was due to the method of calculating bundle weights and not necessarily indicative of clandestine removal without duty payment. The Tribunal noted that no further investigation was conducted to establish clandestine removal. As penalty under Section 11AC was not justified without evidence of removal without duty payment, the Tribunal set aside the penalty imposed on the Appellant. The Tribunal concluded that in the absence of proposal of penalty under any other provisions, no penalty could be imposed solely based on the shortage. The appeal was partly allowed, setting aside the penalty imposed by the Commissioner (Appeals).

In conclusion, the Tribunal's decision focused on the lack of evidence supporting clandestine removal of goods without duty payment, leading to the setting aside of the penalty under Section 11AC imposed on the Appellant.