2010 (3) TMI 64 - HC - Central Excise

Clandestine removal penalty u/s 11AC held that - a categorical finding has been returned by the Tribunal that there was no clandestine of the cenvattable inputs. - The manufactured goods had not been removed out of the factory premises and hence it cannot be said that any material or stock of the finished product had been removed out of the factory premises clandestinely.

Summary

Issues:
1. Whether there was clandestine removal of cenvattable inputs by the manufacturer?
2. Whether the manufacturer is liable to pay penalty under Section 11AC of the Central Excise Act?

Analysis:
The High Court of PUNJAB AND HARYANA heard an appeal where the Revenue challenged an order by the Customs, Excise & Service Tax Tribunal that absolved the respondent from penalty under Section 11AC of the Central Excise Act. The main issue was whether there was clandestine removal of cenvattable inputs by the manufacturer. The adjudicating authority initially imposed a penalty, which was upheld by the Commissioner (Appeals) but overturned by the Tribunal due to lack of evidence supporting clandestine removal. The High Court remanded the matter back to the Tribunal, which again found no material evidence of clandestine removal.

The Tribunal concluded that there was no clandestine removal of the cenvattable inputs, as the manufactured goods were not taken out of the factory premises secretly. The judgment referenced a previous case law to support the decision, stating that when substantive findings are against the Revenue, the imposition of penalties does not apply. Therefore, since there was no clandestine removal established, the respondent's case aligned with previous legal precedent.

In light of the above analysis, the High Court found no merit in the appeal and dismissed it. The judgment was delivered on March 11, 2010, by Hon'ble Mr. Justice Ashutosh Mohunta and Hon'ble Mr. Justice Mehinder Singh Sullar.