2002 (5) TMI 177 - AT - Central Excise

Summary

Issues:
Appeal against duty demand and penalty under Section 11AC of Central Excise Act, 1944. Imposition of penalty on Director under Rule 209A of Central Excise Rules, 1944 for alleged clandestine removal of excisable goods without payment of duty.

Analysis:
The appeals were filed against a common order confirming duty demand and imposing penalties. The appellants, engaged in manufacturing marble slabs, contested the allegations of clandestine removal of goods. The physical stock verification revealed a shortage, leading to the imposition of penalties. The appellants argued that the shortage was due to measurement errors and not clandestine removal. They emphasized the lack of direct evidence supporting the charge of clandestine removal, citing legal precedents requiring tangible proof for such allegations. The mandatory penalty under Section 11AC was deemed unjustified, as there was no concrete evidence of evasion. The appellants also challenged the penalty imposed on the Director, contending that no specific contravention was mentioned to warrant such a penalty.

The Revenue, represented by the SDR, argued that the appellant admitted to shortages and operated under a self-removal procedure. They highlighted the discrepancies in stock measurements and reiterated that the penalties were justified based on the admissions made by the Director. The Revenue's stance was that the self-removal procedure did not absolve the appellants of responsibility for accurate stock maintenance and duty payment.

After considering the submissions and case laws, the Member (J) found that the Department failed to provide direct and tangible evidence to prove clandestine removal. The lower authorities' reliance on presumption without substantial proof was noted, leading to the conclusion that the charge of clandestine removal was not substantiated. Consequently, the impugned order was set aside, and the appeals were allowed, indicating a lack of evidence to support the allegations of clandestine removal and unjustified penalties.