2016 (9) TMI 629 - AT - Central Excise

SSI Exemption - Imposition of penalty - clandestine removal of goods - goods cleared during February and March 2004 have not been accounted for in the books of accounts and no Central Excise duty have been paid on removal of those goods from the factory - duty deposited on information from the department - Held that - it is found that immediately on detection of mistake by the Central Excise Department regarding alleged removal of goods, the appellant had voluntarily deposited the duty. It is also found that though the appellant had not contested the duty demand but the same cannot be accepted as the duty paid towards clandestine removal of the goods. Thus, in the interest of justice, the quantum of penalty imposed in the adjudication order can be reduced. Therefore, the penalty imposed on the appellant company is reduced to ₹ 10,000/- and personal penalty to ₹ 5000/-. No duty benefit shall be extended to the appellant. - Appeal disposed of

Summary

Issues: Imposition of penalty against the appellants for alleged removal of goods without payment of Central Excise duty under SSI exemption.

The judgment revolves around the imposition of penalties against the appellant company for the alleged removal of goods without accounting for them in the books of accounts and without paying Central Excise duty. The appellant, engaged in manufacturing domestic electrical appliances and availing SSI exemption, was visited by Central Excise Department officers who discovered discrepancies in the records during their verification in February and March 2004. The department concluded that the SSI exemption claimed by the appellant was not valid due to the unaccounted goods. Subsequently, a show cause notice (SCN) was issued in September 2004 confirming the duty demand and imposing penalties on both the company and its authorized signatory.

The advocate for the appellant argued that the conclusion of goods being removed clandestinely was solely based on a notepad without substantial evidence. The appellant, to avoid prosecution, voluntarily paid the duty but sought a waiver of the penalty under Rule 25 of the Central Excise Rules, 2004, read with Section 11AC of the Central Excise Act, 1944. On the contrary, the Revenue's representative reiterated the findings of the impugned order, emphasizing that since Section 11AC was invoked, the penalty should stand as confirmed without reduction.

After hearing both parties and examining the records, the Member (Judicial) noted that the appellant promptly deposited the duty upon detection of the mistake by the Central Excise Department. While the appellant did not contest the duty demand, it was clarified that the payment did not imply admission of clandestine removal. In the interest of justice, the Member decided to reduce the penalty imposed in the adjudication order. Consequently, the penalty on the appellant company was reduced to ?10,000 and the personal penalty to ?5,000. The judgment disposed of the appeal by reducing the penalty amount confirmed in the impugned order, with no extension of duty benefit to the appellant.