2003 (12) TMI 449 - AT - Central Excise

Summary

Issues:
- Whether the appellant failed to enter the full quantity of products in the books of account and pay duty on the full quantity of goods manufactured and cleared from the factory.

Detailed Analysis:

1. Issue of Quantity Discrepancy:
The central issue in this case revolves around the discrepancy in the quantity of PVC sheets manufactured and cleared by the appellant. The central excise officers observed that the actual lengths of PVC rolls were slightly higher than the lengths recorded in the statutory production records. This led to a show cause notice being issued, alleging that the appellant had cleared more goods than accounted for, resulting in the evasion of Central Excise Duty.

2. Explanation by the Appellant:
The appellant argued that the discrepancy arose due to the inherent shrinkage of the product. They provided an explanation that they included slightly higher quantities in each roll to account for this shrinkage, which was not reflected in the statutory records. The appellant contended that they had already declared a 7.5% allowance for shrinkage to the excise authorities, even though the observed variation was only 1.30 to 4%.

3. Legal Standpoints:
The Revenue contended that there was no provision in Central Excise law for shrinkage allowance, and the excess quantity offered by the appellant could not be considered as a quantity discount eligible for deduction. On the other hand, the appellant argued that the excise authorities misunderstood the commercial practice regarding shrinkage allowance and that they had discharged duty based on the total payments received for the goods sold.

4. Judgment and Analysis:
The Tribunal found merit in the appellant's contentions. It was established that the item in question was prone to shrinkage, and the slightly higher quantities included in the rolls were in line with commercial practice. The records maintained by the appellant were consistent with the actual sales made, and duty was paid based on the value realized from the sales. Therefore, the allegation of short accounting to evade duty was deemed unjustifiable, as there was no loss of revenue. The Tribunal concluded that the dispute over quantity was irrelevant for the levy and payment of excise duty, leading to the success of the appellant's appeals and the failure of the Revenue's appeals.

5. Final Decision:
In light of the above analysis, the Tribunal ruled in favor of the appellant and their officer, while the appeals of the Revenue were dismissed. The judgment emphasized that the entire dispute was technical and academic, with no impact on the Central Excise Duty payment, as duty was discharged based on the realized value of the goods sold.