Appeal allowed, penalty upheld for shortage of excisable goods under Section 11AC. Shortage unexplained.

The appeal was allowed, and the penalty under Section 11AC for the shortage of excisable goods was upheld. The court found that the shortage of finished goods was not adequately explained by the respondent, indicating improper accountal rather than mere oversight. As the shortage remained unexplained, the penalty imposed by the adjudicating authority was restored.

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Issues: Appeal against order setting aside penalty under Section 11AC for shortage of excisable goods.

Analysis:
The judgment revolves around an appeal filed by the Revenue against an order setting aside the penalty imposed under Section 11AC of the Central Excise Act for the shortage of excisable goods. The Commissioner (Appeals) had set aside the penalty, stating that the shortage was due to various reasons and not clandestine removal, as alleged by the department, which was not proven. The respondent, engaged in manufacturing various products falling under specific chapters of the Central Excise Tariff, had their factory premises inspected by Revenue Officers. It was discovered that there was both shortage and excess in the stock of finished products. The excess goods were seized and later released upon payment of redemption fine. However, the shortage of 18 units of A.C. Generators, 58 diesel engines, 40 C.F. Water Pumps, and 12 diesel sets against the statutory records remained unexplained by the respondent. The respondent accepted the shortage and paid the duty amount. The authorized signatory failed to provide a valid reason for the shortage during verification. The judge, after reviewing the adjudication order and the Commissioner (Appeals) order, concluded that the shortage of finished goods, without a valid explanation, indicated improper accountal rather than mere oversight. Therefore, the judgment restored the penalty imposed under Section 11AC by the adjudicating authority, as the shortage of excisable goods remained unexplained, and the respondent failed to provide a valid reason for the discrepancies. The appeal was allowed accordingly, and the penalty under Section 11AC was upheld.

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