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TMI Blog2010 (1) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... and duty demand of Rs. 1,50,495/- on the shortage of inputs has been confirmed and penalty has been imposed under Rule 173Q(1) of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944. 2. Learned advocate on behalf of the appellants submitted that in this case the General Manager had admitted the shortage and also had admitted that they had removed the same without payment of duty. However mere admission of shortage cannot be considered to have proved clandestine removal. As regards shortage as such he submits that the duty liability has already been discharged. Further, he also submitted that the stock taking was not done properly and this contention has been raised at the lower levels also. He submits that more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Rules, 1944. Since Rule 57(I) has not been invoked for penalty purposes, the penalty imposed on the appellant as regards shortage of input cannot be sustained. As regards duty liability on the inputs, the same has been discharged by the appellants before issue of show cause notice. 4. The learned DR submits that in this case there was a clear admission by the General Manager that he had removed the goods without payment of duty. Further, the inputs also have been removed without payment of duty. Therefore imposition of penalty under Rule 173Q and under Section 11AC was in order. 5. I have considered the submissions made by both the sides. Before I proceed it would be appropriate to reproduce the relevant paragraphs in the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellant was required to show cause and the relevant portion of the show cause notice read is under : 01. Why the Central Excise duty amounting to Rs. 31,301/- leviable on 6.562 MT of galvanized steel strips, valued at Rs. 2,08,672/- found short during the panchnama dated 8-11-97 and subsequently paid by them should not be confirmed under Rule 9(2) of Central Excise Rules, 1944 read with proviso to sub-section (1) of Section 11A of Central Excise Act, 1944; 02. Why the Central Excise duty amounting to Rs. 1,50,495/- leviable on 31.400 MT of CRCA strips valued at Rs. 5,96,600/- and 4.813 MT of Zinc Metal/Alloy valued at Rs. 4,06,698/- both inputs found short during the panchnama dated 8-11-97 and subsequently paid by them should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clandestine removal, ingredients of provisions of Section 11AC are not present and penalty is not imposable. Therefore on this aspect I agree with the contentions of the appellant that no penalty is imposable under Section 11AC. The question arises as to whether penalty could have been imposed under 173Q when Rule 9(2) of Central Excise Rules specifically provided for penalty. It is to be noted that Rule 9 also quotes Section 11A within the Rule itself which would show that where extended period has to be invoked, the provisions of Section 11A would be applicable and thereby provisions of Section 11AC also get attracted. Therefore I find considerable force in the argument that when Rule 9(2) of the Rules provides for penalty, penalty could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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