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2013 (12) TMI 696 - AT - Central ExciseApplicability of Section 11AC of the Central Excise Act, 1944 in the light of the judgement of UoI Vs. Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT Held that - Section 11AC of the Act was introduced which made the position clear that there is no scope for discretion and accordingly it cannot be sustained that Rules 96 ZQ and 96 ZO have a concept of discretion in built to impose lesser penalty - Investigation has not established that shortages found in fact were cleared clandestinely by the appellant. There is no confessional statement of the appellant that shortages were cleared clandestinely without payment of duty - Shortages found in the stocks could be a good ground for raising suspicion but it should be corroborated by the confessional statement of the assessee and/or other evidences that such shortages were clandestinely removed also - There is also no evidence of seizure of any goods clandestinely cleared by the appellant - the shortage of finished goods by itself could not, unless it is related to clandestine removal of finished goods for which there was no material evidence, infer evasion of Excise duty - It is also an established law that any presumption, howsoever strong, cannot take the place of an evidence - The ingredients as contained in Section 11AC of Central Excise Act, 1944 are not applicable to the facts and circumstances of the present case thus, penalty imposed upon the appellant under Section 11AC of Central Excise Act, 1944 is not imposable and set aside Decided inf avour of Assessee.
Issues:
1. Applicability of Section 11AC of the Central Excise Act, 1944 to the case. 2. Imposition of penalty under Section 11AC based on shortages found in the factory premises. 3. Interpretation of directions given by the High Court in remand orders. 4. Examination of evidence and confessional statements regarding clandestine removal of goods. Analysis: Issue 1: Applicability of Section 11AC The case involved determining whether Section 11AC of the Central Excise Act, 1944 applied to the appellant's situation. The Hon'ble Supreme Court's judgments in the cases of UoI Vs. Dharmendra Textile Processors and UoI Vs. Rajasthan Spinning & Weaving Mills were crucial in establishing that once Section 11AC is found applicable, there is no discretion in quantifying the penalty. The Tribunal had to assess if the facts of the case satisfied the conditions of Section 11AC. Issue 2: Imposition of Penalty The appellant argued that shortages found in their factory were not due to clandestine removal of goods but could be attributed to other reasons. They contended that the penalties under Section 11AC were imposed based on presumptions and assumptions rather than concrete evidence. The Revenue, however, asserted that unexplained shortages indicated clandestine removal, justifying the penalty under Section 11AC. Issue 3: Interpretation of High Court Directions The High Court's remand orders directed the CESTAT to consider the applicability of Section 11AC in light of specific judgments. The Tribunal was instructed to base its decision on the law laid down by the Apex Court in the mentioned cases. The appellant's case was to be re-evaluated in accordance with these directions. Issue 4: Examination of Evidence The Tribunal analyzed the evidence presented, including the appellant's defense and statements made before the adjudicating authority. The absence of concrete proof of clandestine removal, such as confessional statements or seized goods, led the Tribunal to conclude that the penalties imposed under Section 11AC were not warranted. The Tribunal emphasized that mere shortages without evidence of evasion could not justify the imposition of penalties. In conclusion, the Tribunal found that the ingredients of Section 11AC were not applicable to the appellant's case based on the evidence, legal interpretations, and precedents cited. Consequently, the penalty imposed under Section 11AC of the Central Excise Act, 1944 was set aside, and the appellant's appeal was allowed.
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