2017 (11) TMI 236 - AT - Central Excise

Shortages of finished goods - validity of submissions made by respondent - principles of Natural Justice - Held that - all the submissions made by the appellant is not based on the assumption or presumption but it is based on the documents such as RT-12 returns/ER-1 returns, RG 1 register and stock verification conducted by the department, therefore records which is basis for explanation of the respondent cannot be said it is afterthought and no new material was brought by the respondent - The explanation is based on the existing record, which was there at the time of recording panchanama, in such a situation the rejection of all the submissions and documents by the adjudicating authority contending that it is afterthought is absolutely incorrect and it is in clear violation of natural justice. I uphold the dropping of penalty of ₹ 1 Lac by Ld. Commissioner(Appeals) of Shri. P.K. Dasgupta. As regard the appeal against company, matter remanded to the adjudicating authority for passing a fresh order after affording personal hearing to the respondent - appeal allowed by way of remand.

Summary

Issues:
1. Discrepancy in stock records leading to demand of Central Excise duty and penalties.
2. Admissibility of explanations provided by the appellant regarding the stock difference.
3. Maintainability of appeal against personal penalty imposed on an individual.

Analysis:
1. The case involved a discrepancy in the stock records of the appellant, a manufacturer of excisable goods, leading to a demand for Central Excise duty, penalties, and personal penalties on individuals. The investigation revealed a significant difference between the physical stock and the stock balance shown in the returns, prompting the issuance of a show cause notice culminating in an adjudication order confirming the duty demand, penalties, and personal penalties.

2. The Revenue contended that the demand was based on admitted shortages of finished goods, supported by the difference between the returns and physical stock. On the other hand, the appellant provided explanations for the differences, citing reasons such as inadvertent errors in returns, captive consumption, and rejection of goods not accounted for as clearances. The appellant argued that the demand for certain goods was incorrect as they were exempted at the relevant time. The appellant submitted documentary evidence and explanations to support their claims, challenging the rejection of their submissions as an afterthought and a violation of natural justice.

3. The Tribunal, after considering the submissions, found that the explanations provided by the appellant were based on existing records and not afterthoughts. The adjudicating authority's dismissal of the appellant's submissions without proper verification was deemed a violation of natural justice. The Tribunal upheld the dropping of the penalty imposed on an individual below the threshold limit for departmental appeals. The case against the company was remanded to the adjudicating authority for a fresh order after verifying all documents and explanations submitted by the appellant.

This detailed analysis of the judgment highlights the issues, arguments presented by both parties, and the Tribunal's decision, providing a comprehensive understanding of the legal proceedings and outcome.