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of <h1>Demand and penalty set aside after payment made before show cause notice issuance under Rule 25(1)</h1> <h3>M/s Standered Auto General Engineers Versus Commissioner of Central Excise, Meerut</h3> M/s Standered Auto General Engineers Versus Commissioner of Central Excise, Meerut - TMI ISSUES: Whether the demand of Central Excise duty on alleged clandestine removal of iron and steel scrap is sustainable in absence of direct or indirect evidence.Whether a statement alone, without corroborative evidence, can form the basis for confirming clandestine removal and consequent duty demand.Whether penalty under Section 11AC(1)(c) of the Central Excise Act, 1944 is justified when the demand was paid prior to issuance of the show cause notice.Whether the issuance of a show cause notice after payment of demand affects the maintainability of penalty and demand. RULINGS / HOLDINGS: The demand of Rs.45,361/- on account of alleged clandestine removal of scrap is based on 'assumption and presumption and surmises' and not supported by any evidence; hence, it is not maintainable.A statement of the proprietor admitting clandestine removal, without any corroborative evidence, 'cannot be concluded' as sufficient proof for confirming the demand.Since the demand was deposited by the appellant 'much before the issuance of the SCN,' the subsequent issuance of the show cause notice and imposition of penalty is unwarranted and reflects judicial indiscipline.The penalty imposed under Rule 25(1) of the Central Excise Rules, 2002 read with Section 11AC(1)(c) of the Central Excise Act, 1944 is set aside on the ground that no clandestine removal was established and demand was paid prior to SCN issuance. RATIONALE: The Court applied the legal framework under the Central Excise Act, 1944, and Central Excise Rules, 2002, particularly Sections 11A and 11AC, emphasizing the requirement of evidence beyond mere assumptions for confirming clandestine removal and demand.Precedent and consistent Tribunal and superior Court rulings were cited to reinforce the principle that payment of demand prior to issuance of SCN negates the justification for penalty imposition and further proceedings.The Court highlighted a doctrinal stance against issuing SCNs after demand payment, describing such practice as 'judicial indiscipline' leading to unnecessary litigation.No dissenting or concurring opinions were noted in the judgment.
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