2001 (1) TMI 643 - AT - Central Excise

Summary

Issues:
1. Upholding of demand under Section 11A of the Central Excise Act, 1944 and imposition of penalties.
2. Challenge against the show cause notice regarding shortage of finished goods and raw material.
3. Appeal against the order of the Deputy Commissioner confirming duty demand and penalties.
4. Appeal before the Tribunal against the order of the Commissioner (Appeals).
5. Contention regarding penalty amount under Section 11AC of the Act.
6. Imposition of penalty under Rule 173Q of the Central Excise Rules.

Issue 1: Upholding of demand under Section 11A and Imposition of Penalties
The appeal was filed against the order-in-appeal upholding the demand of Rs. 2,71,003 under Section 11A of the Central Excise Act, 1944, and imposing penalties of equal amounts under Section 11AC of the Act and Rs. 1,00,000 under Rule 173Q of the Central Excise Rules. The Commissioner (Appeals) affirmed the order of the Deputy Commissioner, leading to the appeal before the Tribunal.

Issue 2: Challenge Against Show Cause Notice
The appellants contested the show cause notice alleging shortage of finished goods and raw material. They denied the shortage, claiming the goods were never physically weighed on the premises. However, the Deputy Commissioner disagreed, confirming the duty demand and penalties. The appellants' appeal before the Commissioner (Appeals) was rejected, upholding the Deputy Commissioner's order.

Issue 3: Appeal Before the Tribunal
The appellants appealed to the Tribunal against the order of the Commissioner (Appeals) challenging the duty liability for the shortage of finished goods and raw material. The Tribunal noted the findings of both lower authorities based on evidence of shortage and admissions by the Works Manager and Managing Director, upholding the duty demand.

Issue 4: Contention Regarding Penalty under Section 11AC
The appellants argued that the penalty equal to the duty amount under Section 11AC could not be imposed as the provision was not in force when the alleged clandestine removal occurred. The Tribunal agreed, setting aside the penalty of Rs. 2,71,003 imposed under Section 11AC.

Issue 5: Imposition of Penalty under Rule 173Q
Regarding the penalty of Rs. 1,00,000 imposed under Rule 173Q, the appellants contended it was unjustified and exorbitant. The Tribunal, considering the appellants' financial situation and the amount already deposited, reduced the penalty to Rs. 20,000, allowing some relief to the appellants.

Conclusion
In conclusion, the Tribunal modified the impugned order of the Commissioner (Appeals), partially allowing the appeal of the appellants by setting aside the penalty under Section 11AC and reducing the penalty under Rule 173Q.