9911796707
TMI Blog2022 (10) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... used for production of their finish products-formaldehyde, dutiable under subheading 2912 of the CETA. 2. There was a search in the factory premises on 05/03/1999 wherein the stock of raw material and finish goods was verified, as per revenue there was shortage of 32.421 MT of methanol (raw material) and shortage of 262.400 MT of finish stock (formaldehyde). Certain records were also resumed under panchanama. Thereafter SCN dated 23/06/2001 was issued on the appellant company and its two directors Shri Promod Lunawat & Shri Mukesh Singhaniya and one Prachi Polymers, alleging clandestine removal of 3996.286 MT formaldehyde (including 262.400 MT found short) valued at Rs. 2,79,74,002/- on which duty was demanded of Rs. 50,35,320/-. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stock taking (Dip method) may be correct as the same was adopted in consultation with the person of the appellant present at the time of search. 5. So far as the allegation of clandestine clearance, it was observed that appellant have failed to account for a total quantity of 743.895 MT of methanol, out of which 453.302 MT has been established as consumed in the production of formaldehyde without accounting. As per the formula and explanation of the chemist of the appellant, the quantity of clandestinely manufactured and removed works out at 1378.595 MT which appears to be reasonable on the basis of lab test register, formaldehyde analysis report, transport document, and is also corroborated due to shortage found in the stock of formald ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured out of unaccounted methanol consumed. (para 12.5 of Show cause notice) Total 20,67,654/- + 43,768/- (credit)= Rs. 21,11,422/- 7. Accordingly, reduced duty of Rs. 21,11,422 was confirmed and further equal amount of penalty under Section 11AC was imposed. Further, penalty under Rule 209A, Central Excise Rules, 1944 was imposed for Rs. 50,000/- each on the two directors, Shri Promod Lunawat & Shri Mukesh Singhaniya. Penalty on co- appellant Prachi Polymers was maintained at Rs. 5 lakhs. 8. Being aggrieved the appellants are before this Tribunal. Learned Counsel Mr. Abhishek Jaju inter alia assails the imposition of penalty on the appellant Co. and its directors. Learned Counsel urges that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortage of finished goods and raw materials. I further find that not a single instance of clandestine removal have been found by revenue by way of interception of any consignment without proper invoices/challan etc. In this view of the mater, I find that there is not reasonable basis for imposition of penalty under Section 11AC/Rule 209A of the Central Excise Rules, 1944.
11. In view of my findings and observations, I allow this appeal in part and set aside the penalty under Section 11AC on the appellant company and also set aside the penalty imposed on the two directors Shri Promod Lunawat & Shri Mukesh Singhaniya under Rule 209A of Central Excise Rules, 1944. Appeals are allowed accordingly.
(Order dictated in the open court) X X X X Extracts X X X X X X X X Extracts X X X X
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