CEA No.44 of 2009 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CEA No.44 of 2009 Decided on : 04.03.2010 Commissioner, Central Excise Commissionerate ... Appellant versus M/s Ravi Cotsyn Ltd., Ludhiana ... Respondent CORAM : HON'BLE MR. JUSTICE ASHUTOSH MOHUNTA HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR Present : Mr. Gurpreet Singh, Advocate for the appellant. Mr. Jagmohan Bansal, Advocate Amicus Curiae for the respondent. **** ASHUTOSH MOHUNTA, J. (ORAL) In the impugned order (Annexure P-3) passed by the Customs, Excise & Service Tax Appellate Tribunal dated 25.06.2008 it was held that although it was an admitted case of clandestine removal, duly corroborated by the shortage noticed of raw materials and finished goods and therefore, the demand of duty was justified and imposition of penalty was also warranted. Accordingly, the Tribunal reduced the penalty from Rs.6,58,851/- to Rs.2,00,000/-. In the present case, following question of law arises for consideration of this Court: i) Whether the penalty imposed under Section 11AC of the Central Excise Act, 1944 can be reduced in a case where it has been found that there was CEA No.44 of 2009 -2- clandestine removal of the material? A perusal of the impugned order passed by the Tribunal shows that it is categorically held that there was clandestine removal of the goods, which was duly corroborated by the shortage of raw material and finished goods, which was noticed by the officials of the department. Accordingly, the Tribunal was right in holding that the demand of duty is justified and imposition of penalty is also warranted. However, once it has been held that there was clandestine removal of the raw material and finished goods, then the Tribunal has no power to reduce the penalty. Reliance has been placed on Union of India vs. Rajasthan Spinning & Weaving Mills, 2009(238) ELT 3(SC), wherein it has been held that even if duty is deposited prior to the show cause notice, the liability to the penalty cannot be wiped out under Section 11AC of the Central Excise Act, 1944. It has further been held that once liability to pay duty is established then there is no discretion to the department to reduce the penalty under Section 11AC of the Central Excise Act, 1944. In view of the above, once the department has found clandestine removal of raw materials and finished goods, then there is no discretion left to reduce the penalty. Resultantly, the question posed in this appeal is answered in favour of the revenue and against the assessee. For the foregoing reasons this appeal is allowed and order (Annexure P-3) dated 25.06.2008 passed by the Appellate Tribunal is set CEA No.44 of 2009 -3- aside with regard to the reduction of penalty. The order passed by the Commissioner (Annexure P-2) is maintained. (ASHUTOSH MOHUNTA) JUDGE March 04, 2010 (MEHINDER SINGH SULLAR) sonia JUDGE