2009 (2) TMI 128 - HC - Central Excise

Penalty u/s 11C clandestine removal of goods - a categorical finding has been recorded by the Tribunal that such an intention cannot be presumed because the shortage which was detected during stock verification stood explained. As per the statement of the Director, the day-to-day affairs of the company were not being looked after by him and, therefore, he was not able to explain the shortage. There is no material to support the clandestine removal of inputs. Once the aforementioned findings of fact are there then it is not possible to apply the provisions of section 11AC of the Act so as to impose penalty

Summary

Issues:
1. Challenge to the order under section 35G of the Central Excise Act, 1944.
2. Application of section 11AC of the Act for penalty imposition.
3. Overruling of previous judgments regarding duty deposit before show-cause notice issuance.
4. Dismissal of appeal on merit and related applications under section 149 CPC and section 5 of the Limitation Act.

Analysis:
1. The High Court was approached by the revenue challenging an order passed by the Tribunal under section 35G of the Central Excise Act, 1944. The Court noted that to attract the provisions of section 11AC of the Act for penalty imposition, there must be an intention to evade Excise duty. In this case, the Tribunal found that the shortage detected during stock verification was explained by the Director's inability to oversee the company's day-to-day affairs. The Tribunal also found no evidence supporting clandestine removal of inputs, leading to the conclusion that penalty under section 11AC could not be imposed due to lack of intent to evade duty.

2. The appellant's counsel referred to previous judgments overruled by the Tribunal, questioning whether duty deposit before show-cause notice issuance would affect the finding of intent to evade duty. However, the Court emphasized that in the present case, the Tribunal's clear finding was that there was no clandestine removal of inputs and the shortage was due to the Director's lack of involvement in daily operations. As such, the previous judgments did not impact the substantive findings against the appellant, leading to the dismissal of the appeal as no legal question warranting admission arose.

3. In C.E.A. No. 40 of 2009, the Court noted the dismissal of the appeal on merit, rendering any decision on the application under section 149 CPC for court fee deficiency and the application under section 5 of the Limitation Act for condonation of delay unnecessary. The Court found no need to address these applications due to the dismissal of the appeal itself.

This detailed analysis of the judgment highlights the key legal issues addressed by the High Court in the context of the Central Excise Act, 1944, and the specific findings and reasoning leading to the dismissal of the appeal.