2004 (7) TMI 120 - AT - Central Excise

Tribunal dismisses appellants' explanation, rules on duty amount & penalties.

The Tribunal upheld the duty amount due to a shortage of raw materials, dismissing the appellants' explanation as unsubstantiated. The Commissioner's ... Demand - Shortages of raw materials - Penalty - Imposition of Issues:- Shortage of raw materials- Imposition of penalty under Rule 11AC- Imposition of penalty under Rule 173QShortage of Raw Materials:The appeal stemmed from an Order-in-Appeal noting a shortage of raw materials, including HDPE fabrics and granules, which the appellants failed to sufficiently explain. The Commissioner upheld the duty amount based on evidence of physical shortages. The appellants argued the shortage was due to using fabrics for wrapping HDPE sacks since 1987. However, the authorities found this explanation unsubstantiated, as detailed accounts were lacking. The Tribunal concurred, stating the shortage was adequately addressed by the authorities, with no grounds for interference.Imposition of Penalty under Rule 11AC:The original authority imposed a penalty under Rule 11AC, but the Commissioner deemed it inapplicable due to the period in question predating its enforcement. Despite this, the Commissioner imposed a penalty of Rs. 1.5 lakh under Rule 173Q without notice to the appellants or an appeal from the Revenue. The Tribunal held that the Commissioner lacked the authority to impose a penalty under Rule 173Q without prior invocation by the original authority or in the Show Cause Notice. Consequently, the penalty under Rule 173Q was set aside.Imposition of Penalty under Rule 173Q:The Tribunal found that the Commissioner's imposition of a penalty under Rule 173Q without prior invocation by the original authority or in the Show Cause Notice was unjustified. The Tribunal ruled that the penalty under Rule 173Q could not be imposed for the first time by the appellate authority without proper procedural adherence. Therefore, the penalty under Rule 173Q was overturned, while upholding the duty confirmed by the lower authorities. The Tribunal modified the impugned order accordingly, disposing of the appeal with this adjustment.