Rule 25 penalty sustained where stock shortages were explained by accounting discrepancies and no clandestine removal was proved.

Penalty under Rule 25 of the Central Excise Rules, 2002 was upheld where stock shortages in raw material and finished goods were explained by estimation-based production records, actual weighment at clearance stage, burning loss, and stock-accounting discrepancies. In the absence of rebuttal evidence from the Revenue or proof of clandestine removal, the matter was treated as one of irregular record maintenance rather than suppression or illicit clearance. The penalty was therefore considered justified and adequate, and the Revenue's challenge failed.

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Issues: Whether the penalty imposed under Rule 25 of the Central Excise Rules, 2002 was justified where stock shortages were found but there was no evidence of clandestine removal.

Analysis: The recorded facts showed shortage in raw material and finished goods, but the adjudicating authority and the appellate authority both found that the shortages could be explained by factors such as estimation-based production records, actual weighment at clearance stage, burning loss, and other discrepancies in stock accounting. The Revenue did not produce evidence to rebut these findings or to establish clandestine removals. On that basis, the authorities treated the matter as one of irregular maintenance of records rather than a case of suppression or illicit clearance, and the quantum of penalty was assessed as adequate.

Conclusion: The penalty under Rule 25 was upheld as adequate and the Revenue's challenge failed.

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