(1.) The respondents are manufacturers of M.S. Bars chargeable to Central Excise Duty under sub -heading 7144 99 90 of the Central Excise Tariff Act, 1985. Their factory was visited by the Jurisdictional Central Excise Officers on 19/9/05 and physical stock taking was conducted in the presence of independent panch witnesses in course of which the shortage of 47.800 MT in the stock of M.S. Bars was detected. Shri P.C. Sinha, Authorised Signatory was present at the stock taking and he agreed with the shortage detected by the officers and stated that the goods found short has been removed in his presence without payment of duty and without issuing invoice. The duty involved on the goods was Rs. 1,34,986/ - was paid on 21/9/05. However, subsequently, a show cause notice was issued to the respondent for confirming the duty demand and also imposition of penalty under Section 11AC for clandestine removal of the finished goods without payment of duty. The Assistant Commissioner vide order -in -original dated 19/2/07 confirmed the duty demand and ordered appropriation of the amount already paid towards the duty demand and beside this imposed penalty of Rs. 1,34,986/ - on the respondent under Section 11AC. The Commissioner (Appeals), however, on appeal by the respondent vide order -in -appeal dated 21/2/08 set aside the order of penalty on the ground that there was no evidence that the goods found short had been clandestinely cleared and also that the entire duty had been paid prior to the issue of show cause notice. It is against this order that the present appeal has been filed by the Revenue.
(2.) None appeared for the respondent though notice has been issued to them, however, respondent have filed cross -objection registered as E/CO/255/08. Heard Shri V.K. Saxena, learned Departmental Representative, who pleaded that the respondent do not dispute the shortage of 47.800 MT in the stock of MS Bars and at the time of stock taking the authorized signatory had admitted the removal of this quantity without payment of duty. From this, it is clear that the goods found short have been removed clandestinely and no further evidence in this regard is necessary and that in view of this, the penalty under Section 11AC has been rightly imposed by the Assistant Commissioner. He pleaded that just because the duty had been paid prior to the issue of show cause notice, the penalty under Section 11AC cannot be waived as has been done by the Commissioner (Appeals). According to the learned DR, since the elements for invoking Section 11AC are present in this case, the penalty as per the provisions of this section should have been imposed and in this regard, he cited the judgment of Hon'ble Supreme Court in the case of Union of India v. Rajasthan Spinning & Weaving Mills reported in : 2009 (238) E.L.T. 3 (S.C.).