TMI Blog2014 (2) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... and the person tried their best to not to leave any evidence and such person cannot be expected faithfully to put the details of such clearances in some register and append their signatures. The clandestine activity can at best be established by the substantial evidence. Evidence forthcoming clearly establish the clandestine nature of activities by the respondents. Such grave irregularities could not be there if persons involved in he controlling of company are not part of such design. Mens rea is clearly imputed. In the strict sense, the provisions of Section 11AC get attracted . However it is observed that duty amount and 25% of duty amount as penalty have already been paid even prior to issue of show cause notice, benefit of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited by the respondent herein. Further appeal also relates to non-impositon of penalty on Directo under rule 26 of Central Excise Rules, 2002. The following points were taken up by Revenue: The party are engaged in the manufacture of ERVV Black Galvanised Pipes Tubes classifiable under Chapter 73 of the first Schedule to the Central Excise Tariff Act , 1985. They are also availing CENVAT credit on the specified input and capital goods and utilizing such credit to discharge the central excise liability on the finished products manufactured and cleared by them. The officers of the Central Excise Commissionerate, Meerut II visited their factory premises on 30.9.2009 and on verification of stocks of finished goods i.e MS pipes, GI pip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial i.e. MS pipes, HR/MS Coil/Patra Skelp/Strips was detected. 3. It is further stated that shortages as referred to above accepted by Shri Harish Jugran, Director. After acceptance of shortages, he debited the central excise duty amounting to Rs.5,03,172/- (five lacs three thousand one hundred seventy two only). They also deposited 25% of the duty amount towards penalty amounting to Rs.1,25,793/- on 23.4.2010. Revenue also stated that Shri Harish Jugran, Director of M/s Vrindavan Tubes Ltd., Jindal Nagar, Ghaziabad was responsible for the conduct of the business of the company. He was responsible for transporting, removing, depositing, accounting and removal of 28.105 MY of finished goods i.e. MS pipes, GI pipes and 164.24 MT on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 248 (Tri-Mum.) and Rutivi Steel Alloys - 2009 (243) ELT 154 (Tri-Ahmd.), however, he finally concluded that in the absence of any ingredients of Section 11AC, penalty imposed on the appellant No.1 was not sustainable. 6. For the sake easy reference, a table giving details of finished goods/raw material, quantity shown book balance , quantity of physically verified during checking and shortage detected along with value of goods found short are indicated in the table below to appreciate the matter in its totality: Sl. No. Description of goods Finished goods/raw material Qty as per book balance shown by the notice (in MT Qty physically verified in MT) Shortage detected (in M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantity of 104.03 MT as per book balance only 67.37 MT were physically available and shortage of 36.66 MT was detected which was valued at Rs.1074285/- . 11. From the above it is observed that in respect of MS pipes, (finished products) and MS pipes (raw material), shortage detected was to the tune of 1/3rd of the total quantity as per balance shown in the record. In respect of GI pipes, MS Pipes and HR Coil/Patra/Skelp/ strips, values were Rs.171000/-, Rs.4113813/- and Rs.1074285/- respectively. It is eivdent that substantial shortages were detected total valued at Rs.6100458/- Appellants plea that these are the normal shortages and could result out of weighment and accountal error are not having any force since shortages are very su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AC get attracted . However it is observed that duty amount and 25% of duty amount as penalty have already been paid even prior to issue of show cause notice, benefit of payment of 25% of duty as penalty is available. 13. Regarding imposition of penalty under Rule 26 on the Director, I find from facts detailed above that large scale of shortages are detected total valued at Rs.66 lakhs (approx.). Such type of anomalies cannot happen without the involvement of Director. In this case, Mr. Harish Jugran has been overseeing the activities of the company. Without his involvement, such shortages could not be justified. Further Shri Harish Jugran admitted the shortages without any justification. There will be no economic sense left if affairs are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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