Clandestine removal finding attained finality, so deletion of penalty did not erase the duty demand.

Where a prior finding sustaining clandestine removal has attained finality, later deletion of penalty under Section 11AC and Rule 209A does not automatically extinguish the duty demand arising from that finding. The appellate order had already confined the clandestine removal finding to a specified quantity and remanded only for recomputation of duty and reconsideration of penalty. Because that order was not challenged, the duty liability based on the final finding remained intact. The Tribunal therefore maintained the duty while setting aside the penalty, and the challenge to the duty demand failed.

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Issues: Whether the duty demand could be set aside merely because the penalty under Section 11AC of the Central Excise Act, 1944 was set aside, when the earlier order sustaining clandestine removal had attained finality.

Analysis: The earlier appellate order had confined the finding of clandestine removal to a specified quantity and had remanded only for recomputation of duty and reconsideration of penalty. That order was not challenged and therefore attained finality. In compliance, the adjudicating authority recomputed the duty and imposed penalty. In the later appeal, the Tribunal found no reasonable basis for penalty under Section 11AC of the Central Excise Act, 1944 and Rule 209A of the Central Excise Rules, 1944, but maintained the duty because the finding sustaining clandestine removal and the resultant liability had already become final. The setting aside of penalty did not, by itself, erase the duty liability flowing from the earlier final determination.

Conclusion: The duty demand was correctly maintained and the challenge to it failed.

Final Conclusion: The appeal did not succeed on the substantive question of duty liability, and the impugned order was sustained.

Ratio Decidendi: Where a prior finding sustaining clandestine removal has attained finality, later deletion of penalty does not automatically nullify the duty demand arising from that final finding.

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