Unaccounted clearances sustained with reduced penalty benefit where duty was deposited during investigation

Confirmed duty demand was sustained on the basis of material showing unaccounted clearances and the related investigation, while the penalty was restricted to the concessional level because the duty had already been deposited during investigation. The interest liability was to be computed and adjusted against the amount lying in deposit. The result was partial relief to the assessee through application of reduced penalty treatment, but the duty demand itself remained upheld.

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Issues: Whether the confirmed duty demand of Rs. 1,63,815 under section 11A and the penalty under section 11AC could be sustained, and whether the appellant was entitled to the reduced penalty benefit.

Analysis: The demand was upheld on the basis of the material on record relating to the unaccounted clearances and the related investigation. The appellant was, however, found entitled to the concessional penalty treatment because the duty had already been deposited during investigation. The interest liability was also directed to be worked out and adjusted against the amount already lying in deposit.

Conclusion: The duty demand of Rs. 1,63,815 was confirmed, but the penalty was confined to 25% of the confirmed duty amount. The matter was thus decided partly in favour of the assessee.

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