2007 (9) TMI 210 - AT - Central Excise

Imposition of penalty for clandestine removal by ad. authority u/s 11AC Clandestine removal admitted by assessee but Comm(A) reduced penalty by observing that there was simply presumption of clandestine removal - When ad. authority had imposed penalty, the Comm (A) could not have reduced it by interfering with the discretion of the ad. authority if there is no indication that the order of penalty was legally defective or not based on evidence - penalty imposed by OIO is restored

Summary

Issues:
Challenge to reduction of penalty by the Commissioner (Appeals) from Rs. 2,14,739 to Rs. 25,000.

Analysis:
The appeal was filed by the Revenue against the Commissioner (Appeals)'s order reducing the penalty imposed on the respondent. The Department's representative argued that there was no justification for reducing the penalty, citing legal precedents. The physical verification revealed a significant shortage in steel ingots and MS Bars at the respondent's factory premises. The partner of the respondent admitted to the shortage and selling goods without paying Central Excise duty, leading to evasion. The Commissioner (Appeals) erred in reducing the penalty without any legal defect in the original order. The Tribunal emphasized that in cases of gross violations, penalties should not be reduced from the amount equal to the duty determined. The partner's admission of clandestine removal without proper documentation negated any presumption and warranted the penalty imposed by the adjudicating authority under Section 11AC. The Tribunal highlighted the difficulty in proving clandestine activities and upheld the duty determined by the adjudicating authority as justified, rendering the question of imposing a reduced penalty irrelevant.

Therefore, the Tribunal set aside the Commissioner (Appeals)'s order reducing the penalty and restored the penalty imposed by the original order. The appeal by the Revenue was allowed, emphasizing the importance of upholding penalties in cases of evasion and gross violations of statutory provisions.