Stock credit in shortage computation justified; duplicate penalty under Rule 173Q was not warranted where Section 11AC applied.

Physical stock found in the factory was accepted as March 2000 production but had been omitted from the shortage computation. Once that stock was credited, the alleged shortage and the resulting duty demand were reduced. The separate penalty under Rule 173Q was held unwarranted because penalty under Section 11AC had already been imposed on the same facts. The Commissioner (Appeals) was therefore justified in adjusting the stock, reducing the shortage-based demand, and deleting the duplicate penalty, and the Revenue's challenge failed.

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Issues: Whether the Commissioner (Appeals) was justified in allowing the stock of 16,900 metres found in the factory to be adjusted against the alleged shortage and in deleting the penalty under Rule 173Q while sustaining the duty and equal penalty under Section 11AC.

Analysis: The stock found during physical verification was admittedly lying in the factory and represented March 2000 production, but it had not been taken into account while computing the shortage. After giving credit for that stock, the shortage and consequential duty demand stood reduced. Since penalty under Section 11AC had been imposed on the assessee, the separate penalty under Rule 173Q was not warranted on the same facts.

Conclusion: The modification made by the Commissioner (Appeals) suffered from no legal infirmity and was upheld; the Revenue's challenge failed.

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