Commissioner, Central Excise vs Aar Kay Industries

Adarsh Kumar Goel, J.—This appeal has been preferred by the revenue u/s 35G of the Central Excise Act, 1944, against order dated 23.9.2009 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi, claiming following substantial questions of law:

(i) Whether the judgment and order passed by the Tribunal is proper and legal?

(ii) Whether the Tribunal was right in dismissing the appeal filed by the Appellants?

(iii) Whether Section 11A(2B) 2(B) is applicable when duty is debited by an Assessee on detection of shortage of excisable goods by the department?

(iv) Whether the Penalty is imposable u/s 25 of the Central Excise Act, 1944 when duty is debited on detection on shortage in final products by the department?

The Assessee is manufacture of Joist/Girders/TMT Bars falling under Chapter 72 of the schedule of Central Excise Tariff Act, 1985. Search was conducted on the premises of the Assessee and shortage of stock was found. After issuing show cause notice, the adjudicating authority passed order-in-original raising demand of duty and also imposed penalty of Rs. 1.75 lacs under Rule 25 of the Central Excise Rules, 2002. The Commissioner (Appeals) confirmed order-in-appeal but on further appeal, the Tribunal set aside the levy of penalty having regard to the fact that the payment had already been made in terms of Section 11A(2B).

We have heard learned Counsel for the Appellant.

Learned Counsel for the Appellant submits that mere making of payment was not enough to waive penalty in view of Explanation I where duty was not levied or was not paid or was short levied or was short paid or was erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of law, and with a intent to evade payment of duty. In such situations, penalty could still be levied. Reliance has also been placed on judgment of the Hon''ble Supreme Court in Union of India (UOI) Vs. Rajasthan Spinning and Weaving Mills, .

We are unable to accept the submission. While it is true that mere payment is no bar to levy of penalty in a case falling under Explanation I to Section 11A(2B) as rightly submitted by learned Counsel for the revenue, the fact remains that the Appellant did not raise this plea before the Tribunal and it may be on that account that the Tribunal has not gone into this aspect of the matter. No doubt the Commissioner (Appeals) recorded a finding of clandestine removal and though the Assessee in appeal against the said order challenged levy of penalty, there is nothing to show that the Appellant objected to setting aside of the penalty by showing that shortage of stock was attributable to intention to evade payment of duty. This being a question of fact, in absence of the contention being raised before the Tribunal, we do not consider it necessary to go into that question. The amount of penalty involved is not very heavy. Accordingly, we are unable to hold that any substantial question of law arises.

The appeal is accordingly dismissed.