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2016 (12) TMI 1162 - AT - Central ExciseImposition of penalties - shortage in stock - clandestine removal - Held that - I find that no evidence has been brought on record to substantiate that the shortage of goods detected during the course of investigation were clandestinely removed by the appellant. In absence of any positive evidence of clandestine removal of the goods, I am of the opinion that imposition of penalty on the Company as well as on its Managing Director is not justified. Therefore, I set aside the impugned order with regard to imposition of penalty and allow the appeals. Appeal disposed off - penalty set aside - decided in favor of appellant-assessee.
Issues:
Imposition of penalties under Rule 25 of the Central Excise Rules read with Section 11AC of the Central Excise Act 1944 based on shortage of finished goods detected during investigation; Justification of penalty on the Managing Director. Analysis: The appeals were filed against an order by the Commissioner (Appeals), Customs and Central Excise Meerut, upholding penalties imposed in the adjudication order. The appellant's advocate argued that the shortage in finished goods found by Central Excise Officers did not indicate clandestine clearance, thus penalties under Rule 25 of the Central Excise Rules and Section 11AC of the Central Excise Act should not apply. It was contended that without specific findings of clandestine removal, penalties, including on the Managing Director, were unjustified. The Revenue's representative reiterated the findings of the impugned order, supporting the penalties imposed. However, the Member (Judicial) noted the absence of evidence substantiating clandestine removal of goods by the appellant. Due to the lack of proof of clandestine removal, the Member opined that penalties on the Company and its Managing Director were not justified. Consequently, the impugned order regarding penalty imposition was set aside, and the appeals were allowed. Given the appellant's non-contestation of duty liability, the Member refrained from expressing an opinion on the case's merits. The Department was granted the liberty to recover any duty owed by the appellants. The appeals were disposed of accordingly, with the decision announced in open court.
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