2015 (10) TMI 1935 - AT - Central Excise

Duty demand - Shortage of goods - Imposition of penalty - held that - As such it is clear from the above that the Commissioner (Appeals) has given a clear finding that there are no clandestine removal. However, he has applied the said finding only for the purpose of penalty, whereas the same can be equally applicable for the purpose of confirmation of demand on the findings of clandestine removal. Accordingly, I set aside the demand confirmed against the appellants - Decided in favour of assessee.

Summary

Issues: Detection of shortage in final products during a factory visit leading to initiation of proceedings, confirmation of demand of duty, imposition of penalty, appeal against penalty, applicability of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The judgment pertains to a case where the appellants were engaged in the manufacture of various products and were visited by Central Excise officers who detected a shortage in the final product during checks conducted on 24-2-2009. Subsequently, proceedings were initiated, resulting in the confirmation of a demand of duty amounting to &8377; 2,70,121/- along with the imposition of a penalty.

2. Upon appeal, the Commissioner (Appeals) upheld the confirmation of demand but set aside the penalty. The Commissioner observed that the burden of proving clandestine removal of finished goods lies on the Department, and in the absence of supporting evidence, mere shortage of finished goods cannot be equated with clandestine clearance. Citing precedents, the Commissioner highlighted the necessity of positive evidence to impose a penalty under Section 11AC of the Central Excise Act, 1944. The Commissioner emphasized that in the absence of evidence of clandestine clearances, the penalty is not sustainable.

3. The Commissioner's finding indicated that there was no clandestine removal, which was crucial in the context of the penalty imposed. However, it was noted that the same finding could equally apply to the confirmation of demand based on the alleged clandestine removal. Consequently, the demand confirmed against the appellants was set aside, and the appeal was allowed with consequential relief granted to the appellants.

In conclusion, the judgment emphasizes the importance of concrete evidence to establish clandestine removal of goods for the imposition of penalties under the Central Excise Act, 1944. The decision underscores the necessity of meeting the burden of proof by the Department and highlights the significance of clear findings in both penalty and demand confirmation proceedings.