1999 (12) TMI 412 - AT - Central Excise

Summary

Issues:
1. Imposition of mandatory penalty under Section 11AC for removal of goods without payment of duty.
2. Shortage of inputs and demand for duty on the shortages and raw materials.

Analysis:
1. The case involved the manufacture of products under Chapters 38 and 39, where finished products were found outside the factory premises, leading to a seizure by Central Excise officers. The Addl. Commissioner confirmed the demand for duty and imposed penalties under Rule 173Q and Section 11AC. The advocate for the appellants argued that the statutory penalty under Section 11AC was not warranted as the goods were recorded in prescribed statutory records, and there was no non-levy or short payment. The advocate contended that the liability to pay duty arose when the goods were recorded in the RG 1 register, and there was no fraud or suppression of facts. The Tribunal found that the violation of stocking goods in an approved place could be dealt with under Rule 173Q, and since the goods were recorded in the RG 1 register, the mandatory penalty under Section 11AC was not justified. The Tribunal set aside the part of the order imposing the penalty under Section 11AC, upholding the rest of the order.

2. Regarding the shortage of inputs, the advocate argued that the shortage was due to the volatile nature of the goods and technical reasons, amounting to less than 2%. The Tribunal noted that while some inputs may be volatile, there was no evidence to show that the shortage was accumulated over time. As there was no proof of accumulated shortage, the Tribunal did not interfere with the demand for duty on the shortages and raw materials. Consequently, the Tribunal partly allowed the appeal by setting aside the penalty under Section 11AC but upholding the rest of the order.