2003 (12) TMI 125 - AT - Central Excise

Summary

Issues:
1. Liability for penal action despite payment of duty before the issuance of show cause notice.
2. Shortage of finished products and imposition of penalty.

Issue 1: Liability for penal action despite payment of duty before the issuance of show cause notice.
The case involved the manufacture of Leaf Spring and Stabilizer. The Revenue Department found a shortage of finished products and an additional amount received from a customer. The respondents contended that they disclosed the additional amount received and the relevant price variation clause. The Tribunal noted that the respondents had no intention to evade duty regarding the additional amount, as it was disclosed in the relevant return. Therefore, the respondents were not liable for penal action concerning the additional amount received.

Issue 2: Shortage of finished products and imposition of penalty.
Regarding the shortage of finished products, the respondents failed to explain the shortage and admitted to it. The Tribunal referred to a previous case where it was held that even if duty was paid before the issuance of a show cause notice, penal action could be imposed for contravention of the Central Excise Act/Rules. As the shortage was not accounted for by the respondents, a penalty of Rs. 25,000 was imposed. The Tribunal found that this penalty was appropriate based on the facts and circumstances of the case, and the appeal was disposed of accordingly.