No Penalty for Unrecorded Finished Goods in Factory without Evidence of Clandestine Removal

Sharma Steel Rolling Mills Vs Commissioner (CESTAT Delhi)

No Penalty for Unrecorded Finished Goods in Factory without Evidence of Clandestine Removal and personal penalty on the employee need not be imposed as he is acting under direction of his employer and there is no evidence of personal benefit.

Introduction: In a recent decision by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Delhi, the case of Sharma Steel Rolling Mills vs Commissioner has shed light on the issue of imposing penalties on the unaccounted excess stock of finished goods in a factory. The Tribunal overturned the penalties imposed on Sharma Steel Rolling Mills and its authorized signatory, Shri Mukesh Kumawat. The central argument in this case revolved around the absence of sufficient evidence to prove the intentional evasion of Central Excise duty.

Background: During a visit by Central Excise officers to the premises of Sharma Steel Rolling Mills on September 7, 2012, a stock of 34.95 MT of MS ingots and 181.355 MT of MS Angles, allegedly in excess of the recorded stock, was found. The officers contended that this excess stock was maintained with the intent to clear goods without paying Central Excise duty. Subsequently, a show cause notice was issued, proposing confiscation of the seized goods and imposing penalties under Rule 25(1)(b) and Rule 26(1) of the Central Excise Rules, 2002.

Key Arguments and Findings:

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