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2009 (5) TMI 463 - AT - Central ExciseWaste scrap-penalty- shortage- the appellant- company are manufacturers of plywood and were clearing the said goods on payment of duty. On further investigation, it was found that apart from shortages of raw materials and finished goods, it was also noticed that the appellant had cleared cuttings and trimmings of veneers, as waste wood. A show cause notice was raised directing the appellant to show cause as to why the cuttings and trimmings of veneer should not be classified under Chapter Heading No. 4404.90 and subjected to duty. The adjudicating authority after considering the replies and submissions made by the appellant before him, came to the conclusion that the appellants are liable to pay duty and imposed an equivalent amount of penalty under the provisions of Section 11AC on the appellant. The learned Commissioner (Appeals) in the impugned order, after granting a personal hearing and considering the written and oral submissions made by them, upheld the entire Order-in-Original. Aggrieved by such an order, the appellants are before us. Held that- Hence, though there is no allegation of removal of these goods clandestinely or otherwise, since there is a shortage of finished goods, the appellants are liable to pay excise duty on the said shortages, which is noticed by the authorities during the stock verification. In view of this, we confirm the demand of duty of Rs.1,18,828/- on the shortages noticed by the lower authorities and uphold the impugned order to that extent.7. Another issue in this appeal is demand of Rs.10,253/- on the resins which was found short. The appellants are not challenging this part the confirmation of the demand of the duty, hence, the impugned order to this extent it upholds this confirmation of demand, is upheld. As regards the penalty, we find that the penalty has been imposed under Section 11AC of Central Excise Act, 1944. Since we have held that the demand of the duty on the waste wood is unsustainable, there cannot be any penalty on such an amount of duty. We find that the penalty imposed on these two employees is unwarranted. The impugned order to the extent upholds the penalties imposed on these two employees, is also not sustainable and is liable to be set aside and we do so.
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