2007 (6) TMI 75 - AT - Central Excise

Tribunal Upholds Commissioner's Decision Dismissing Department's Appeal on Penalty Imposition for Finished Goods Shortage

The Tribunal upheld the Commissioner (Appeals) decision and dismissed the Department's appeal against the penalty imposition set aside for a shortage of ... Penalty - Department contended that appellant is the clandestine removal of goods on the ground that shortage of stock found during the investigation - Held that mala fide intention of appellant was not proved and accordingly penalty set aside Issues: Department's appeal against penalty imposition set aside by Commissioner (Appeals)The Department appealed against the order of the Commissioner (Appeals) which set aside the penalty imposed on the appellant's company for a shortage of finished goods. The officers visiting on 29-8-1997 noted the shortage, and the Director could not initially explain it. The duty amount was paid immediately without dispute. The original authority deemed it as clandestine removal and imposed a penalty under Section 11AC read with Rule 173Q. However, the Commissioner (Appeals) found no mala fide intention on the appellant's part and deemed it unfit for penalty imposition.During the hearing, the Id. DR reiterated the original authority's findings. The Tribunal considered whether a penalty could be imposed in the absence of admission about clandestine removal or corroborative evidence like unaccounted procurement of raw materials. The Tribunal noted that only a shortage was admitted during the officers' visit, with duty paid for the unaccounted finished goods. Given the lack of evidence supporting clandestine removal, the serious charge could not be imposed on the appellant. Consequently, the Tribunal upheld the Commissioner (Appeals) decision and dismissed the Department's appeal.