2009 (9) TMI 481 - AT - Central Excise

Demand- Shortage of finished goods- the Revenue Officials visited the factory premises of the appellants and on verification, it was found that there was shortage of 49.290 MT of the finished goods when compared with the statutory report. There is also shortage of packing materials i.e. Jute Bags. The finished goods are Silico Manganese which are cleared in the Jute Bags containing 50 kgs of Silico. The adjudicating authority confirmed the demand and imposed penalties. The Commissioner (Appeals) dismissed the appeal filed by the appellants. Held that- the physical verification was conducted in the presence of authorized signatory and the Production Manager admitted the shortage without raising any objection regarding correctness of quantities mentioned in the memo prepared by the Revenue Official in respect of stock position and hence, I find no infirmity in the impugned order whereby the demand is confirmed. In respect of the imposition of penalty under Section 11AC of the Central Excise Act, I find that there is no evidence on record that the goods were cleared clandestinely. In the decisions relied upon by the appellants, the Tribunal held that in case the goods found short regarding which the duty is confirmed and in the absence of any evidence regarding clandestine removal of the goods of the appellants, penalty under Section 1IAC is not sustainable. In view of the above decisions, penalty under Section 11AC of the Act is set aside. Otherwise, the impugned order is upheld.

Summary

The Appellate Tribunal CESTAT, KOLKATA, citation 2009 (9) TMI 481, heard an appeal against an order confirming a demand of Rs.2,25,235.00 for finished goods found short, with penalties imposed under various sections of the Central Excise Act and Rules. The case involved a shortage of 49.290 MT of finished goods and packing materials at the factory premises, with the Production Manager admitting the shortage. The appellants contended that the shortage was based on eye estimation and not actual weighment, and that penalties were unjustified as there was no evidence of clandestine removal of goods. The Revenue argued that the shortage was confirmed during physical verification in the presence of authorized personnel. The Tribunal found no issue with the demand confirmation but set aside the penalty under Section 11AC, citing previous decisions where penalties were not upheld without evidence of clandestine removal. The impugned order was otherwise upheld.