2006 (12) TMI 293 - AT - Central Excise

Commissioner (Appeals) rules on excise duty penalties, emphasizing document defense and location of discrepancies

The Commissioner (Appeals) upheld the penalty under Rule 173Q but dropped the duty demand and set aside the penalty under Section 11AC of the Central ... Demand and penalty Issues:Duty demand on excess and shortage of goods, penalty imposition under Rule 173Q, penalty imposition under Section 11AC of the Central Excise Act, 1944.Analysis:The case involved the respondents, engaged in manufacturing excisable goods, with M/s Pratibha Engineering Works as their job worker. An inspection revealed excess and shortage of goods at the job worker's premises. A Show Cause Notice was issued for duty recovery on the discrepancies and penalty imposition. The adjudicating authority confirmed the duty demand and penalty. The Commissioner (Appeals) upheld the penalty under Rule 173Q but dropped the duty demand and set aside the penalty under Section 11AC. The Revenue appealed this decision.During the hearing, it was noted that essential documents for quantifying duty and preparing a defense were not provided to the respondents. The Commissioner (Appeals) considered the location of the discrepancies, stating they were at the job worker's premises, not the respondents', as a crucial factor. The argument for remand to establish the case based on Rule 57F(4) challans was dismissed as the Show Cause Notice relied on oral evidence, not documentary evidence like job work challans. Consequently, the impugned order was upheld, and the appeal was rejected.This judgment highlights the importance of providing necessary documents for defense in excise duty cases and the significance of the location of discrepancies in determining liability. It also clarifies the reliance on oral versus documentary evidence in such proceedings, emphasizing the need for proper evidentiary support for duty demands and penalties.