9911796707
TMI Blog2006 (8) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... ished goods in the presence of panch witnesses, it was noticed that there was a shortage of finished goods to the extent of 2340 pcs of PVC Pipes (110mm*3) in comparison to the recorded balance in the RGI register. The Director of the firm Shri H.K. Agarwal accepted the shortage which was detected. When asked to explain the shortage, he only stated that the finished goods may have been removed from the factory in his absence without accountal and without payment of Central Excise duty due thereon. He accepted the responsibility and agreed to deposit the entire Central Excise duty of Rs. 1,50,474/- involved on the said shortage detected in the quantity of finished goods. Thereafter, by letter dated 21-6-04, the assessee informed the department that the said amount was deposited on 16-6-2004 under Section 11A(2B) of the Central Excise Act, 1944. A show cause notice was issued on 3-8-04 against the appellants stating that the assessee had violated the provisions of Rules 4, 6, 8, 10 and 11 of the Central Excise Rules, 2002, inasmuch as the assessee did not maintain its records correctly and cleared the goods without invoice and without payment of duty and that the duty paid was liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been cleared in his absence as he was not in the factory passed the impugned order. The Commissioner (Appeals) rejected the plea of the assessee, that on re-verification of the stock of finished goods by themselves, it was found that there was no shortage, on the ground that they did not raise such issue in the case and that it was only by letter dated 2-11-04, i.e. after a lapse of about five months and after issuance of the show cause notice dated 6-8-04, that such contention was raised, which was nothing but an after-thought. It was held that since the shortage had been admitted by the Director, who agreed to pay the duty on the spot and given no reason for such shortage, no further investigation was warranted to corroborate clandestine removal. He relied upon the decision of the Tribunal in the case of Bharat Plast v. CCE, Valsad reported in 2004 (168) E.L.T. 204 (T), wherein the Tribunal held that, once production that is recorded and shown in balance when compared to the quantity actually available as physical balance is found short, the shortage is deemed to have been removed from the factory in a clandestine manner and the department is not required to prove it any further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at penalty should not be imposed and interest should not be levied. The decision of the Larger Bench of the Tribunal in the case of CCE, Delhi-III, Gurgaon v. Machino Montell (I) Ltd. reported in 2004 (168) E.L.T. 466 (Tri.-LB) was cited to point out that the Tribunal followed the said decision of the Karnataka High Court, observing that, the very same issue was placed before it and that it was not possible to take a different view. It was held that if the duty amount was paid by the assessee before the issuance of the show cause notice, no penalty can be imposed. The learned Counsel also relied upon another decision of the Larger Bench in Al-Falah (Exports) v. CCE, Surat-I, reported in 2006 (198) E.L.T. 343 (Tri.-LB) which was rendered in the context of provisions of Customs Act, 1962, for the proposition that no penalty could be imposed when the duty short paid was paid before the issuance of show cause notice. 8. The learned authorised representative for the department, on the other hand, submitted that the clandestine production and removal of the excisable goods was clearly established from the admission of the appellant-Director and no further corroborative evidence was req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reduced from Rs. 1,50,474/- to Rs. 40,000/- so far as the appellant company is concerned. The contention raised is that since the duty amount was paid on 16-6-04 after the panchnama was drawn on 5-6-04, there was no liability arising to pay any penalty in view of the aforesaid decision of the Karnataka High Court and of the Larger Bench of the Tribunal following the same. 11. In this context, we may notice the provisions of Section 11A(2B) of the said Act, which read as under :- 11A (2B) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty before service of notice on him under sub-section (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid: Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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