Judgment:
1. The above appeal arises out of the order of the Commissioner of Central Excise (Appeals) Jaipur, by which he has upheld duty demand of Rs. 39,883 on shortage of processed man made fabrics, upheld the confiscation of 1721 Mtrs. of finished man made fabrics on the ground that their value had been wrongly declared, with option to redeem the same on payment of a fine of Rs. 10,000 and upheld penalty of an amount equal to duty in terms of Section 11AC of the Central Excise Act.
2. We have heard Shri K.K. Anand, Learned Counsel and Shri P.K. Jain, Learned SDR. We find that the shortage of 3332.50 Mtrs. of processed man made fabrics on which duty demand of Rs. 33,325 had been confirmed was arrived at by totalling meterage shown on the tags in each "than".
Although the shortage is only 0.07%, in view of the trade practice where thousands of meters are involved, and accountal is based on the tags attached in each "than" indicating actual quantity therein, and noting that the appellants have not adopted any other method of measurement, we agree with the authorities below that the shortage is not imaginary but actual and hence confirm and duty demand thereon.
Similarly, the demand on shortage of 690.40 Mtrs. of grey fabrics is confirmed, although the shortage was only 0.04%, for the same reason.
The confiscation of finished man made fabrics is upheld since the value declared by the supplier of the raw materials has been found to be incorrect. The redemption fine does not call for any reduction having regard to the value of the goods, which is Rs. 82,387.49. However, we agree with the appellants that no case for imposition of penalty under section 11AC is made out since the ingredients of the proviso to Section 11A(1) of the Act have not been spelt out or established in respect of the quantity found short on which duty has been demanded.
We, therefore, set aside the penalty imposed under section 11AC. For the same reason, interest levied under section 11AB of the Act is also set aside.