2008 (9) TMI 789 - AT - Central Excise

Summary

Issues:
Reduction of penalty imposed under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner (Appeals) where the penalty was reduced from Rs. 1,42,301 to Rs. 10,000. The central excise officers found a shortage of finished goods in the Respondent's factory, and the Manager accepted the shortage without providing a valid explanation. The duty was paid, and the Adjudicating Authority confirmed the duty demand, imposing a penalty equal to the amount deposited. The Commissioner (Appeals) further reduced the penalty to Rs. 10,000.

Upon review, it was observed that there was no evidence of clandestine clearance of goods, although the shortage remained unexplained by the Respondent. The mere acceptance of the shortage and payment of duty did not automatically imply clandestine removal. The argument that acknowledging the duty demand proved clandestine removal was dismissed. It was emphasized that for imposing a penalty under Section 11AC of the Act, clandestine removal must be established, which was lacking in this case. Consequently, the Tribunal upheld the decision of the Commissioner (Appeals) and rejected the Revenue's appeal.

In conclusion, the Tribunal found no grounds to interfere with the order reducing the penalty imposed under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. The absence of evidence supporting clandestine removal led to the rejection of the Revenue's appeal, affirming the decision of the Commissioner (Appeals) to reduce the penalty to Rs. 10,000.