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TMI Blog2023 (12) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... ngots valued at Rs.11,14,905/- and 181.355 MT of MS Angles valued at Rs.64,92,509/- was allegedly found in excess to the recorded stock. The Central Excise officers alleged that the excess stock was kept unaccounted with the intent to clear without payment of Central Excise duty. Hence, the same was seized under the relevant provisions. Consequent to the seizure, show cause notice dated 05.03.2013 was issued, proposing confiscation of the seized goods under Rule 25(1)(b) of the Central Excise Rules, 2002 (hereinafter referred to as 'the Rules') and imposition of penalty under Rule 25(1)(b) of the Rules on appellant no.1 and penalty under Rule 26(1) of the Rules upon the appellant. The Original Authority adjudicated the notice, and the Commissioner (Appeals) upheld the Order-in-Original vide the impugned order. 3. The learned Counsel for the appellant No. 1 & appellant No.2 submitted that the impugned Order-in-Appeal No. 135- 136(SM)CE/JPR/2021 dated 16.11.2021 passed by the Commissioner (Appeals), Central Excise and Central Goods & Service Tax, Jaipur had been passed without appreciating the true legal and factual position. 4. The learned Counsel contended that no penalty can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock verification was done by the officers of the department. As the stock verification had been done based on the eye estimation, the stock verification cannot be relied upon. He further submitted that the impugned order had relied on the statements of the appellant recorded under Section 14 of the Central Excise Act, 1944 despite the fact that the statements were later retracted. The impugned order has not given any importance to the retraction of the statements. 6. The learned Authorized Representative reiterated the discussions and findings given in the Order-in-Original and Orderin- Appeal. He submitted that the ingots and angles were found excess in the premises of the factory without any entry in the statutory records. The Authorized Representative submitted that Shri Mukesh Kumawat, authorized signatory of the unit was present during the Panchnama proceedings, and had agreed with the manner and method of stock verification, by appending his signature on Panchnama and stock verification. The retraction of the statement was merely an afterthought, and had been done after more than a year after tendering it. He contended that weighment on the basis of which physical stock veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intention on the part of the assessee to evade payment of duty and accordingly, there cannot be a case to confiscate goods or to even impose penalty. Even improper accounting is denying the mean clandestine removal, in the absence of circumstantial evidence proving the same. In view of the above, I set aside the redemption fine imposed on the goods. 9. I now take up the issue relating to imposition of penalty on appellant No. 1. A reading of the legal provisions makes it clear is that for imposition of penalty under Rule 25(1)(b), the condition of Section 11AC of the Central Excises Act, 1944 has to be satisfied. The said Section and Rule is reproduced herein after: 11AC. Penalty for short-levy or non-levy of duty in certain cases.-- (1) The amount of penalty for non-levy or short-levy or non-payment or short-payment or erroneous refund shall be as follows-- (a) where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified and all proceedings in respect of the said duty, interest and penalty shall be deemed to be concluded; (e) where any duty as determined under sub-section (10) of Section 11A and the interest payable thereon under Section 11AA in respect of transactions referred to in clause (c) is paid within thirty days of the date of communication of the order of the Central Excise Officer who has determined such duty, the amount of penalty liable to be paid by such person shall be twenty-five per cent of the duty so determined, subject to the condition that such reduced penalty is also paid within the period so specified. (2) Where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer under sub-section (10) of Section 11A, then, the amount of penalty payable under clause (c) of sub-section (1) and the interest payable under Section 11AA shall stand modified accordingly and after taking into account the amount of duty of excise so modified, the person who is liable to pay duty as determined under sub-section (10) of Section 11A shall also be liable to pay such amount of penalty and interest so modified. (3) Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered person of a warehouse [or an importer who issues an invoice on which CENVAT credit can be taken] or a registered dealer, (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse [or an importer who issues an invoice on which CENVAT credit can be taken] or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [five thousand rupees], whichever is greater. An order unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under subsection (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any wilful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules." 10. In other words, if the ingredients of Section 11AC are not shown to be fulfilled, the penalty under Section 11AC cannot be levied. Therefore, given the wording of Rule 25 of the CE Rules, the ingredients mentioned in Section 11AC have to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the appeal against the decision of the Full Bench of the CESTAT in Commissioner of Central Excise, Delhi v. Ganpati Rolling Pvt. Ltd. (supra) as withdrawn, there was obviously no occasion to consider any of the above decisions of the Gujarat High Court, which in the considered view of the Court merit acceptance. 13. In that view of the matter, the Court is unable to find any infirmity in the impugned order of the CESTAT. No substantial question of law arises for determination by the Court." 11. I find that the Tribunal in the case of Nilesh Steel & Alloy Private Ltd Vs Commissioner of Central Excise, Aurangabad [2008 (229) ELT 399 (Tri-Mum)] observed that penalty should not have been imposed merely because the stock of finished goods are found in the factory without entry in the production register especially, when there is no evidence of clandestine removal. In view of the above settled position, the levy of penalty under Rule 25(1) on the appellant in the instant case cannot be upheld. 12. I now come to the penalty levied under Rule 26(1) on the authorised signatory of the appellant No 2. In order to appreciate the facts and the arguments, I reproduce the rule for ease of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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