2006 (8) TMI 401 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess raw materials under Cenvat Credit Rules 2001.
2. Shortage of Furnace Oil in the factory premises.
3. Shortage of Wire Rods (finished goods) during the visit of the officers.

Confiscation of Excess Raw Materials:
The appeal challenged the order confirming the duty demand on short found finished goods and inputs, and the confiscation of excess raw materials in the factory. The Tribunal found that the confiscation of raw materials in excess of recorded balance, under Rule 13 of Cenvat Credit Rules 2001, was not justified as there was no allegation of wrong or improper availment of credit. Therefore, the confiscation of inputs found in excess was deemed incorrect and without legal force, leading to its setting aside.

Shortage of Furnace Oil:
Regarding the shortage of Furnace Oil, the Tribunal noted that the authorities failed to ascertain the shortage conclusively during the physical verification. The Panchnama lacked details on how the physical stock of Furnace Oil was verified, creating doubt about the accuracy of the shortage determination. The appellant argued that since there was no dip reading taken, the physical stock ascertained during the Panchnama was unreliable. Consequently, the demand for duty on the shortage of Furnace Oil was deemed unwarranted and set aside due to the lack of proper verification procedures.

Shortage of Wire Rods (Finished Goods):
The Tribunal examined the shortage of Wire Rods as recorded in the Panchnama during the officers' visit. The officers meticulously weighed and ascertained the stock of Wire Rods both inside and outside the shed, following a specific method accepted by the Director of the appellant company. The Tribunal found that the authorities correctly determined the shortage of finished goods based on the detailed weighment process, which the appellant failed to satisfactorily explain. Consequently, the demand for duty on the shortage of Wire Rods was upheld, as the authorities' determination was deemed appropriate and supported by the evidence presented.

The Tribunal partially allowed the appeal, setting aside the confiscation of excess raw materials and the demand for duty on the shortage of Furnace Oil, while upholding the duty demand on the shortage of Wire Rods. The judgment highlighted the importance of proper verification procedures and adherence to legal provisions in determining duty demands related to raw materials and finished goods in a factory premises.