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Issues:
1. Duty demanded on shortages of imported goods. 2. Imposition of penalty under Section 112 of the Act. Analysis: Issue 1: Duty demanded on shortages of imported goods The appeal challenged the Additional Collector of Customs' order demanding duty on goods found short in the appellant's premises in the Free Trade Zone. The appellant claimed that the shortages of steel plates were due to wastage within condonable limits as per the notification. However, this argument was not raised earlier and was not supported by evidence. The duty on shortages of components was also contested based on discrepancies in the stock taking report. The appellant argued that small-sized items like washers and springs naturally incur losses during production, citing a judgment of the Madras High Court. The Tribunal, however, found no provision for condonation of shortages based on this argument in the relevant notification and rejected this submission. Issue 2: Imposition of penalty under Section 112 A penalty of Rs. 95,000 was imposed on the appellant, which was challenged. The Department argued that penalty was justifiable under Section 111(o) of the Act. The appellant contended that penalty should not be imposed without mens rea, relying on a Tribunal decision. The Tribunal did not delve into the mens rea aspect but considered the appellant's argument that some level of shortages is inevitable and not due to clandestine removal. Notably, there was no allegation of clandestine removal in the findings. Given the appellant's substantial manufacturing and export activities, the Tribunal concluded that the penalty was unwarranted, and hence, set it aside. In conclusion, the Tribunal partially allowed the appeal by rejecting the duty demands on shortages and setting aside the imposed penalty.
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