2024 (6) TMI 299 - AT - Central Excise

Clandestine removal - shortage of stock - penalty imposed on the Company and Director - HELD THAT - There are force in the argument of the Learned Counsel that while shortage was detected and was also accepted by the Appellant Company, the Department has not alleged as to when these stocks could have been dispatched clandestinely so as to attract interest for the intervening period. The stock taking was conducted on 24/11/2015 and 25/11/2015. The Appellant has paid the Excise Duty on 25/11/2015 in respect of the shortage found. Therefore, there is no provision to demand the interest from the Appellant Company for the already paid Excise Duty. Hence, the interest demanded under the impugned order is set aside. Penalty on appellant company - HELD THAT - Since they could not avail the benefit of the 25% of the penalty earlier, now they are given the option to pay the penalty @ 25% of 3,46,438/-. They should pay the revised penalty amount by 31st July 2024. Penalty on the Director - HELD THAT - The Department has not made out any specific case against the Director to implicate him for the shortages found. As can be seen from the recorded statement of Mr. Subrata Goswami, it is seen that he is taking care of day to day activities of the company. Therefore, there are no justification imposing penalty on the Director and the same stands set aside. Appeal allowed in part.

Summary

Issues involved: Stock shortage, Excise Duty, Interest, Penalty on Company and Director

Stock shortage and Excise Duty: The Department officials found a shortage of M. S. Billets and TMT Bars during physical stock verification at the factory premises. The value of the shortage was determined, and Excise Duty of Rs. 3,46,438/- was calculated. The Authorized Signatory agreed with the shortage and duty amount. The Appellants paid the duty amount, but a Show Cause Notice was issued for interest and penalty.

Interest on Excise Duty: The Appellant argued that no interest should be demanded as the goods were not alleged to have been cleared before stock taking. The Tribunal agreed, stating that since the duty was paid promptly after the stock verification, no interest was payable. The demand for interest was set aside.

Penalty on Company: The Adjudicating Authority imposed a penalty on the Company, which the Appellants were willing to pay at 25%. However, they were unable to do so due to the requirement to pay interest. The Tribunal allowed the Company to pay the revised penalty amount by a specified date, reducing it to 25% of the original penalty.

Penalty on Director: The Appellant's Director was penalized for the stock shortages. The Tribunal found no specific case against the Director and noted that day-to-day activities were managed by an employee. The penalty on the Director was set aside, as there was no justification for holding him responsible for the shortages.

Conclusion: The Tribunal partially allowed the Appeals in favor of the Appellant Company and fully in favor of the Director. The Order-In-Original was modified to reflect the decisions regarding interest, penalty on the Company, and penalty on the Director.