2006 (11) TMI 125 - HC - Central Excise

Penalty - excess of stock - no statement of any person present at the premises was recorded - statement of Accountant was recorded after 5 days of visit of officer - no contemporaneous record was made on visit - subsequently prepared charts in office can t be reliable evidence - Tribunal found that the explanation was required to be secured from the directors about stock position on date of visit Tribunal s finding is a finding of fact so no question of law arise penalty set aside

Summary

Issues:
Appeal against setting aside penalty under Section 173Q of Central Excise Rules, 1944 based on excess stock found during visits to the premises of the assessee.

Analysis:
The case involved an appeal against an order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, which set aside the penalty levied against the respondent-assessee under Section 173Q of the Central Excise Rules, 1944. The Revenue contended that during visits to the assessee's premises, excess stock of finished fabric was found, leading to the imposition of a penalty as the excess stock could not be satisfactorily explained. The primary evidence relied upon was the statement of an accountant, Shri Amrit Kumar Nirmal, who mentioned the excess stock. However, the Tribunal found that no contemporaneous record was made during the visits, and subsequently prepared charts were deemed unreliable. The Tribunal emphasized the need for an explanation from the directors regarding the stock position on the visit dates. As no statement from the directors was obtained, the penalty was set aside.

The High Court directed to place on record the statement of Shri Amrit Kumar Nirmal, which was relied upon by the respondents. Upon examining the statement, it was noted that Nirmal could only explain the stock position on one of the visit dates as the director was absent. The Court highlighted that the crucial aspect was the explanation provided by the director regarding the stock position. Since the Tribunal accepted the director's explanation, the Court considered it a finding of fact based on the available material, not raising any legal question.

Ultimately, the Court dismissed the appeal, stating that as the Tribunal's finding was based on the director's explanation and not on Nirmal's statement, the appeal failed to establish any legal question. Therefore, the penalty levied under Section 173Q was not upheld, and the appeal was dismissed.