TaxTMI 
TaxTMI 
2016 (1) TMI 478
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....-in-progress), for the purpose of ascertaining the handling shortages or the excesses, during the operations of the year. The corrected stocks, as per the actuals, are carried forward in the books and financial statements for the preparation of the final accounts and the balance sheet. When the officers of the Special Audit Department of the Central Excise had conducted the audit, for the period between December, 1997 and February, 1998, it had been found that the production quantities were not entered regularly. The quantity cleared on a particular day was shown as production, for that day, and the closing balance had been shown as NIL, every day. 2.3.) On a perusal of the private records of the company, under the head `Shortage Summary', for the years 1993 to 1997, it had been found that there was a physical shortage of finished products, when compared to the company's own book stock and other documents maintained by it. Such physical shortage of stock had also been noticed in the internal audit of the company. Further investigations had been conducted at the company's actual working area, based on the information gathered from its records. During the physical ve....
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....he period prior to 28.9.1996. 2.6) An appeal had been filed by the appellant before the Central Excise and Service Tax Appellate Tribunal, against the Order-in-Original No.4/99, under Section 35B of the Central Excise Act, 1944, in Appeal No.E/1726/2000. The department had filed an appeal against the Order-in-Original No.4/99, under Section 35E(1) of the Central Excise Act, 1944, in Appeal No.E/1055/2000. 2.7) The Central Excise and Service Tax Appellate Tribunal had passed a common order, in Final Order No.1261 and 1262 of 2006, holding that the Commissioner of Central Excise, was not right demanding a lesser duty of Rs. 45,26,680/-, instead of Rs. 58,09,503.64, as proposed in the show cause notice. With regard to the duty demand on excess goods found, as the Commissioner of Central Excise had not given a definite finding as to whether they had been cleared on payment of duty, the matter had been remanded to decide on the said issue. The Tribunal had dismissed the appellant's appeal and had allowed the department's appeal. Hence, the appellant had preferred the above appeals, on 10.4.2007, under Section 35G of the Act. The appeals had been admitted, on 19.7.2007, on ....
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....djudicated by the Commissioner of Central Excise, in the Order-in-Original, dated 29.7.1999, was to the effect that there were shortages of Iron and Aluminium castings, as noted from the stock taking done, as per the internal audit of the appellant company. The shortages of the goods in the stock taking of the internal audit of the appellant company had been relied on to raise excise duty demands, by the department. 5. The Tribunal, in its Final Order No.1261 and 1262 of 2006, dated 11.12.2006, had observed, in Paragraph No.14 of its order, that there was no convincing explanation for the shortage of castings ascertained by their internal audit branch. All the responsible personnel have refused to attribute the discrepancy to clerical error. It had also been observed that the explanation offered in reply to the show cause notice is an afterthought and cannot reflect the correct state of affairs. Such observations made by the Tribunal are erroneous in nature, as the appellants have consistently maintained and pleaded that the stock inventory taken by the internal audit pertain to `Work-in-Progress' and not finished castings required to be entered in RG1 Register, as the `Work....
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....he appellant. No finding has been recorded as to whether the matter had called for the imposition of penalty on the appellant, under Section 11AC of the Act. There is only a peremptory conclusion stating that the appeal of the assessee is devoid of merits. None of the ingredients of Section 11AC had been set out or applied to the case. The mere fact of affirmation of duty demand need not necessarily result in the affirmation of penalty, under Section 11AC of the Act, as the penalty proceedings in the said Section are quasi criminal in nature, as per the decision of the Supreme Court, in The Commissioner of Income-Tax, West Bengal Vs. Anwar Ali, 1970(2) SCC 185. 10. The learned counsel appearing on behalf of the department had submitted that there is no error in the findings of the Tribunal to sustain the demand made against the appellant and the imposition of penalty, under Section 11AC of the Act. It had been found, in the records of the appellant, including the internal audit statement of the appellant that there were shortages and excesses, and as there were no particulars maintained in the relevant registers relating to the removal of the finished goods from the appellant co....