Commissioner, Central Excise Commissionerate. vs H.S. Steel (P) Ltd.

Aadarsh Kumar Goel, J.—This order will dispose of CEA Nos. 218 and 219 of 2010 as it is stated that both the appeals involve common questions.

ITA No. 218 of 2010 has been preferred by the revenue u/s 35G of the Central Excise Act, 1944 (for short, "the Act") against the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi dated 12.3.2010, Annexure A-4, raising following substantial questions of law:

(1). Whether the Tribunal was correct in holding Commissioner (Appeals) order that Section 11A(2B) of the Act is applicable when duty is debited by the Assessee on detection of the department?

(2). Whether the penalty is impossible under Rule 25 of the Central Excise Rules, 2002 when duty is debited on detection of shortage of raw material as well as finished goods by the department?

The Assessee is a manufacturer of iron and steel products. Show Cause Notice dated 6.8.2004 was issued u/s 11A of the Act alleging short payment of duty which was followed by passing of Order-in-Original dated 11.2.2005 appropriating the duty already deposited and imposing penalty of Rs. 41,313/-. On appeal, the Commissioner (Appeals) set aside the penalty but upheld the payment of duty. On further appeal by the department, the matter was remanded and after remand, it was held that there is no evidence of clandestine removal and the case fell u/s 11A(2B) of the Act and duty having been paid before issuance of Show Cause Notice, no penalty is called for. This view has been upheld by the Tribunal holding as under:

I have carefully gone through the submissions. It is noticed that the Commissioner has given finding that the demand has been made merely on the basis of shortage of inputs in the case of H.S. Steel (P) Ltd. and shortage of finished goods in the case of Mahadev Steel Industries as they have not been able to satisfactorily account for shortage, the duty stands paid by them. However, Commissioner (Appeals) has noticed that no other evidence has been cited by them by the department to impose penalty on the finding of clandestine removal of inputs finished goods as held by the original authority. In view of the above, he came to the conclusion that these cases filed under the ambit of Section 11A(2)(b) of the Act, question of penalty in the present case does not arise. The grounds of Appeal do not reveal any facts which can upset the finding of the Commissioner (Appeals). That these cases are covered u/s 11A(2B) of the Act. Therefore, I hold that no valid grounds have been adduced to interfere with the orders of the Commissioner (Appeals) in so far as the above Respondents are concerned.

We have heard learned Counsel for the Appellant.

In view of finding of fact recorded by the Commissioner as well as the Tribunal that there is no evidence of clandestine removal, which finding is not shown to be perverse, there could be no question of penalty. The questions raised cannot, thus, be held to be substantial questions of law.

6.The appeals are dismissed.

A photocopy of this order be placed on the file of other connected case.