2018 (7) TMI 404 - AT - Central Excise

100% EOU - Penalty - Clandestine removal - duty alongwith interest paid before issuance of SCN - Held that - The appellant had already paid the duty along with interest and therefore there is no requirement of issuance of Show Cause Notice. Consequently, the imposition of penalty is not warranted - there is no requirement of issuance of Show Cause Notice for imposition of penalty - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged removal of goods without permission
2. Shortage of stock due to theft
3. Demand of duty for extended period
4. Imposition of penalty without issuance of Show Cause Notice

Analysis:

1. Alleged removal of goods without permission:
The case involved an appellant, a 100% EOU engaged in manufacturing goods under Chapter 42 and 61 of the Central Excise Tariff Act, 1985. Officers found a shortage of stock during a visit to the factory, leading to a Show Cause Notice alleging removal of goods without permission. The Adjudicating authority confirmed a duty demand of &8377; 6,40,328.00 along with penalties. The Commissioner (Appeals) rejected the appeal.

2. Shortage of stock due to theft:
The appellant argued that the shortage of raw materials and finished goods was due to theft, supported by an FIR lodged with the police. The appellant paid the duty immediately upon discovery of the shortage. The Director of the company accepted the shortage and made a payment towards duty. The appellant contended that the demand for duty for an extended period cannot be sustained due to the absence of intent to evade payment.

3. Demand of duty for extended period:
The appellant's counsel argued that there was no suppression of facts with intent to evade payment of duty, thus challenging the demand for duty for an extended period. The appellant's submission highlighted the circumstances surrounding the shortage, attributing it to theft and emphasizing the immediate payment of duty upon discovery.

4. Imposition of penalty without issuance of Show Cause Notice:
The Tribunal noted that the appellant had already paid the duty along with interest, and there was no dispute regarding the shortage being a result of theft. Consequently, the Tribunal held that there was no requirement for the issuance of a Show Cause Notice for imposing a penalty. The penalty imposed on the appellant was set aside, and the appeal was disposed of accordingly.

In conclusion, the Tribunal set aside the penalty imposed on the appellant, emphasizing the immediate payment of duty upon discovery of the shortage due to theft. The Tribunal's decision highlighted the absence of intent to evade payment and the lack of necessity for a Show Cause Notice for penalty imposition in such circumstances.