2009 (8) TMI 991

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....f finished goods without paying Excise duty, set aside the penalty on the respondent-company as well as on Shri Shilendra Khandelwal, Director of the respondent, on the ground that the entire duty had been paid prior to the issue of show cause notice. The Commissioner (Appeals) is in this regard relied upon the judgment of Hon'ble Bombay High Court in the case of Gaurav Mercantile Ltd. reported in 2005 (190) E.L.T. 11 (Bom.), the judgment of Hon'ble High Court of Karnataka in the case of Shree Krishna Pipe Industries reported in 2004 (165) E.L.T. 508 (Tri.) and the judgment of this Tribunal in the case of Rashtriya Ispat Nigam Ltd. reported in 2003 (161) E.L.T. 285 (T), the Govt.'s SLP, against the which has been dismissed by Supreme Court ....

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....he central Excise Rules, 2002 and the Commissioner (Appeals) order setting aside the penalty on Managing Director is incorrect. 4. The respondent in their written submission pleaded that just on account of shortage of finished goods in the RGI Register, it cannot be concluded that there was clandestine removal of finished goods, that the admission of the Director does not prove clandestine removal, that there is no evidence to justify the imposition of penalty on the Director of the respondent-company Shri Shilendra Khandelwal and that in any case since the duty had been paid prior to the issue of show cause notice in accordance with first proviso to Section 11AC, the respondent should have been given an option by the Asstt. Commissioner....

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....erest liability, in accordance with the first proviso to Section 11AC, the Asstt. Commissioner in the Order-in-Original should have given an option to the respondent to avail of the payment of lower penalty under first proviso to Section 11AC. Since such an option has not been given, in view of the judgment of Hon'ble Delhi High Court in the case of K.P. Pouches (supra) and the judgment in the case of Gaurav Mercantile Ltd. (supra) there is a case for reducing the penalty to 25% of the duty involved. Ordered accordingly. 6. As regards penalty on the Managing Director, in view of the fact that this is a case of clandestine removal of the finished goods and the same was with his knowledge and approval, the Asstt. Commissioner rightly impos....