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2016 (5) TMI 609 - AT - Central Excise100% EOU - shortage of 7734.79 meters of fabrics noticed when the fabrics cleared was received after job work - shortage is approximately 3% of the total quantity of fabrics sent for job work and the shrinkage in the fabrics of the type sent for job work ranges from 2.01% to 8.49% - Held that:- it is evident that there has been no illegal diversion of the goods sent for job work and the goods sent for job work were duly processed by the job workers and the resultant product (i.e. the processed fabrics) was either exported or sent back to the appellant; indeed there is no allegation of illegal diversion either. Therefore, there is no question of recovery of any differential duty on the shrinkage in this case. As a result, the impugned demand is not sustainable. When the impugned demand itself is not sustainable, the question of penalty in relation thereto under Rule 25 of Central Excise Rules, 1944 would not arise. Imposition of penalty under Rule 25 - Contravention of the provisions of Notification 52/2003-Cus dated 31.03.2003 and Notification 22/2003 date 31.03.2003 - Held that:- the foremost consequence of contravention of provisions of an exemption notification is denial of benefit thereof. It is found that the adjudicating authority has allowed benefit of the said notification to the appellant. It means that the so called contravention of the provisions of the said notifications were treated to be so insignificant as not to result in denial of the benefit thereof. In these circumstances, to impose penalty for the said contravention of the provisions of the said notifications cannot be called reasonable by any stretch of imagination. Therefore, the impugned order is not sustainable and set aside. - Decided in favour of appellant
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