Court upholds quashed Order-in-Appeal, increases penalty for finished stock shortage

The High Court upheld the quashing of the Order-in-Appeal due to finished stock shortage detected within the premises. The penalty imposed on the assessee was increased to Rs. 16,383, equivalent to the duty involved on the goods seized from the intercepted truck, in accordance with legal precedents. The appeal was disposed of, affirming the assessee's liability to pay the penalty determined by the Court.

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Issues: Appeal against order of Customs, Excise and Service Tax Appellate Tribunal - Questions of law regarding quashing of Order-in-Appeal and penalty imposition.

Quashing of Order-in-Appeal: The High Court considered the correctness of quashing the Order-in-Appeal due to the detection of finished stock shortage by the Central Excise staff using scientific weighment method. The prevailing method of weighment adopted by iron & steel units was highlighted. The Court referred to a case [Delhi-II v. M/s. Mico Glass Industries Private Limited 2010 (254) E.L.T. 254 (P & H)] emphasizing that penalty is leviable only on goods clandestinely removed outside the factory premises, not on goods still within the premises with detected shortage.

Reduction of Penalty: The Tribunal was found to have erred in reducing the penalty imposed on the assessee. The High Court allowed the Revenue's appeal, holding the assessee liable to pay the same amount of penalty equivalent to the duty involved on the goods, which amounted to Rs. 16,383. The Court emphasized that the penalty should be imposed on goods seized from the intercepted truck, in line with a previous case [M/s. Mico Glass Industries' case], where it was established that penalty is applicable to goods being clandestinely removed outside the factory premises.

Disposition of Appeal: Consequently, the assessee was directed to pay an equal amount of penalty on the goods seized from the intercepted truck. The appeal was disposed of with the assessee being held liable for the penalty as determined by the Court based on the circumstances and legal precedents cited.

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