CCE Vs. HANS METAL (P) LTD.

JUDGEMENT

(1.) HEARD learned D.R. on behalf of the Revenue. None appeared on behalf of the respondents.

(2.) AFTER hearing learned D.R. and on perusal of the records, I find that the respondents are engaged in manufacture of M.S. Bars and Structures classifiable under Sub -heading 7214.90 and 7216.90 of the Schedule to the Central Excise Tariff Act, 1985. On 15.9.2004 Central Excise officers visited the respondents' factory and conducted stock verification. The said officers ascertained shortage of finished goods and inputs during stock verification involving central excise duty of Rs. 1,53,165/ -. Shri Sunil Dhiman, authorized signatory accepted the shortage and debited the duty immediately. Original authority confirmed the demand of duty and appropriated the amount as deposited by them. He also imposed penalty of equal amount under Section 11AC of the Central Excise Act, 1944. He also imposed penalty of Rs. 25,000/ - on Shri Sunil Dhiman, authorized signatory of the respondent company. The Commissioner (Appeals) set aside the penalties on the ground that duty was debited before issuance of show cause notice. Revenue filed these appeals against the order of the Commissioner (Appeals).

(3.) THE findings of the Commissioner (Appeals) insofar as the duty was debited before issuance of show cause notice and, therefore, penalty under Section 11AC of the Act is not imposable. It is well settled that mere fact that duty has been paid before issuance of show cause notice would not result non -application of Section 11AC of the Act. It is required to be looked into as to whether ingredients envisaged under Section 11AC of the Act were available in the present case. It is seen that in the instant case the representative of the respondents failed to furnish any reason for shortage, There is no material available that the goods were cleared clandestinely. The Hon'ble Punjab & Haryana High Court in the case of CCE, Ludhiana v. Omkar Steel Tubes (P) Ltd. reported in : 2008 (221) ELT 200 (P&H) held that penalty would be imposable as long as various elements envisaged under Section 11AC are satisfied including mens rea. In the said case representative of the assessee failed to furnish the reasoning for shortage and the original authority imposed penalty of equal amount on the basis of statement. Hon'ble High Court observed that such a statement cannot be regarded as sufficient to conclude that the goods were cleared clandestinely. In any case, no finding has been recorded that there was mens rea on the part of the Director respondent and, therefore, Hon'ble High Court upheld the order of the Tribunal and dismissed the appeal filed by the Revenue. In the present case, there is no evidence that the goods were cleared clandestinely.