TaxTMI 
TaxTMI 
2014 (11) TMI 537
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Customs, Excise and Service Tax Appellate Tribunal, (the Tribunal) New Delhi in Appeal No. E/2489/2007-SM by which the appeal was allowed on 12-8-2009 holding that the appellant company is liable to penalty and the excess stock was liable for confiscation. 3. M/s. Usha Martin Construction Steel Ltd. the appellant, manufactures HSD Bars of iron and steel chargeable to Central Excise duty under sub-heading 7214 20 90 of the Central Excise Tariff. The factory was visited by the jurisdictional Central Excise Officers on 24-12-2005. They carried out physical verification of raw material and finished material (HSD Bars). They found that the R.G.I. Register was showing total stock of 148.30 MT of 12 MM HSD Bars, whereas the actual stoc....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 6. The Tribunal held that the variation in the stock of finished goods in the bonded store to the extent noticed in respect of 12 MM and 16 MM bar was not possible, inasmuch as in respect of 12 MM bars the excess stock was 20%, and in respect of 16 MM the excess stock was to the extent of 100%. If the explanation given by the respondent was to be believed, a similar variation should have been uniformly found in respect of the other varities of bars. The Board's Circular dated 23-9-1999 regarding the excess stock was applicable to integrated steel plants and not to the units run by the company. 7. The Tribunal also found that the ratio of Bhilai Conductors (P) Ltd. (supra), would not be attracted for mere non-accountal of the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d authority would have no discretion in quantifying the amount. The penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. The mandatory penalty is the punishment for an action of deliberate deception by the assessee with the intention to evade duty, by adopting any of the means mentioned in the Section. The elements of Section 11AC, namely the non-payment, short levy or short payment or erroneous refund by reasons of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of the Act or Rules should be established before a person is liable to pay the duty. Both the proviso to sub-section (1) of Section 11A and Section 11AC use the same expression i.e. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he machinery as noticed during test inspection, the finding of non-accountal without any tangible evidence on record is vitiated by error of law as it was based only on inferences involving unwarranted assumptions. 11. Shri S.P. Kesarwani appearing for the Central Excise Department submits that in the present case on the findings that the excess stock of 12 MM Bars was 20% and that of 16 MM Bars was to the extent of 100% for which no satisfactory explanations were given, is not a case of non-accountal of finished goods in the RGI register but a case of deliberate deception in avoiding payment of excise duty. The orders of confiscation and penalty were thus rightly affirmed by the Tribunal. He submits that in Kirloskar Brothers v. Unio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial i.e. HSD bars from the steel ingots. The company is required to keep the records of manufacture of each of its products. Even if the production of 12 MM and 16 MM bars is very small as compared to the total production, the manufacturing account of each finished item has to be kept separately. In the present case non-accountal was not on account of any manufacturing loss but was a deliberate act with an intent to evade payment of excise duty. 13. In Gujarat Travancore Agency v. Commissioner of Income Tax, 1989 (42) E.L.T. 350 (S.C.) the Supreme Court held that in the absence of any indication in the language of statute of the need to establish mens rea, the default in completing with the statute is sufficient for levy of penalty, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharmendra Textile decides. 24. It must, however, be made clear that what is stated above in regard to the decision in Dharmendra Textile is only in so far as Section 11AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other statutory provisions that came up for consideration in that decision." 15. On these principles of law thus far settled, we are of the opinion that in the present case the findings that the non-accountal of 20% of the 12 MM bars and 100% of the 16 MM bars, which could not....