2004 (12) TMI 448 - AT - Central Excise

Summary

Issues:
1. Dispute over shortage of ingots and girders during stock taking.
2. Applicability of previous tribunal decisions on demand sustainability and penalty imposition.
3. Validity of panchnama in determining shortage and clearances.
4. Commissioner (Appeals) reasoning on verification of stock and imposition of penalty.

Issue 1: Dispute over shortage of ingots and girders during stock taking:
The appellant contested the shortage of ingots and girders, arguing that the stock taking was based on average weight, not actual weight. The appellant referenced statements and letters to support their claim that the weight of ingots was not accurately determined. However, the Revenue maintained that the panchnama clearly showed the separation of ingots and girders by size and variety, with the total weight calculated based on average weight, which the appellants did not dispute. The tribunal found that the subsequent challenge to the verification was an afterthought, considering the agreement of the appellants during the stock taking process.

Issue 2: Applicability of previous tribunal decisions on demand sustainability and penalty imposition:
The appellant relied on a previous tribunal decision regarding demand sustainability based on average weight. They also argued against the penalty imposed on clearances made on specific dates, contending that duty was paid before the due date. The tribunal considered the previous decision and the timing of duty payment, ultimately setting aside the penalty based on the Larger Bench's ruling that penalty is not imposable if duty is paid before the show cause notice.

Issue 3: Validity of panchnama in determining shortage and clearances:
The Revenue emphasized the validity of the panchnama in determining the shortage, stating that the method of verification was agreed upon during the stock taking process. They highlighted the absence of entries in the RG-1 register for certain clearances, indicating possible manipulation. The tribunal accepted the panchnama as a crucial document, given the agreement of the appellants during the stock verification process.

Issue 4: Commissioner (Appeals) reasoning on verification of stock and imposition of penalty:
The Commissioner (Appeals) considered the method of verification of stocks and the appellant's contentions. The Commissioner found that the panchnama, drawn in the presence of witnesses, indicated the reasonable time spent on stock taking and the appellant's satisfaction with the process. The tribunal upheld the Commissioner's decision on demanding duty for the shortages but modified it by setting aside the penalty due to duty payment before the show cause notice.

In conclusion, the tribunal upheld the demand for duty on the shortages of ingots and girders, considering the validity of the panchnama and the agreement of the appellants during the stock verification process. The penalty imposed on the appellant was set aside based on the timing of duty payment before the issuance of the show cause notice, following the ruling of the Larger Bench.