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2013 (5) TMI 567 - CESTAT KOLKATAShortage of goods - Penalty - Personal penalty on director - show cause notice issued alleging clandestine removal of the goods in absence of reasonable explanation on the shortage of inputs and finished stocks - Held that:- Mere shortage of finished goods or raw materials in the stock cannot by itself construed that the said goods were removed clandestinely by the assessee. The department has to adduce positive evidences of such removal of goods clandestinely demonstrating the intent to evade payment of duty. In the present case even though it was explained by the Managing Director that shortage of goods could be attributed to the fact of theft that might have taken place during the closure of the factory, the department had not carried out any further investigation to ascertain the correctness of the said statement. In absence of any contrary evidence no force in the argument of the A.R. that the goods must have been clandestinely removed. No merit in the submission of the A.R. that the penalty under Section 11AC is invocable against the respondent. However, the respondent is required to pay duty involved on such shortages which could not be explained and the respondent are liable for general penalty for the said discrepancy. Since no penal provision is invoked in the Show Cause Notice other than Section 11AC, no penalty could be imposed on that count. Thus in absence of direct or indirect involvement of the Managing Director Shri A.K. Agarwal in the clandestine removal of the goods no personal penalty under Rule 26 of the Central Excise Rules, 2002 is imposable on him.
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