2004 (2) TMI 487 - AT - Central Excise

CESTAT Upholds Duty Liability & Penalty for Goods Shortage: Burden of Proof Shifted

The Appellate Tribunal CESTAT, New Delhi allowed the Revenue's appeal in a case involving duty liability and penalty for a shortage of goods. The Tribunal ... Accountal of goods - Proof of Issues:1. Duty liability on account of shortage of goods.2. Imposition of penalty.3. Burden of proof on the respondents.4. Contested shortage of goods.5. Legal value of negligible shortage.6. Exoneration from duty liability.Analysis:The appeal before the Appellate Tribunal CESTAT, New Delhi was directed against an order-in-appeal by the Revenue, where the Commissioner (Appeals) had reversed the order-in-original confirming the duty of Rs. 6,810 on account of a shortage of goods against the respondents and imposing a penalty of Rs. 10,000. The Tribunal noted that physical verification revealed a shortage of 1.816 MTs of steel casting, and the Manager of the respondents admitted the shortage. The Tribunal emphasized that the Department was not required to produce additional evidence once the Manager admitted the shortage, shifting the burden to the respondents to prove the admission incorrect or coerced. The respondents' failure to contest the shortage, coupled with debiting the duty amount, further supported the Department's position.The Tribunal rejected the argument that proof of clandestine removal was necessary, as the respondents' admission of shortage and subsequent action sufficed. The Tribunal distinguished a previous case related to clandestine removal, emphasizing that the circumstances here were different. Additionally, the Tribunal dismissed the notion that the negligible amount of shortage diminished the legal obligation, highlighting that any quantity of shortage attracts duty liability under the law, irrespective of the magnitude. Consequently, the Tribunal set aside the impugned order and restored the order-in-original, allowing the Revenue's appeal. The decision underscores the legal principle that even minor shortages can lead to duty liability and penalties, emphasizing the importance of accurate record-keeping and compliance with regulatory requirements to avoid adverse consequences.