2007 (3) TMI 439 - AT - Central Excise

Summary

Issues involved: Appeal against demand confirmation and penalties imposed for availing credit on inputs; discrepancy in weighment of sponge iron; validity of demand based on eye estimation.

Summary:
1. The appellant, engaged in manufacturing M.S. Ingots and Sponge Iron, appealed against the demand confirmation and penalties imposed for availing credit on inputs. The revenue alleged a shortage of 75 M.T. of sponge iron, leading to the demand.

2. The appellant contended that the weighment of sponge iron was not accurately conducted as a certain quantity was in loose condition in the factory, and no proper weighment was done. The appellant argued that demand based on eye estimation is not sustainable.

3. The revenue's contention was that while some sponge iron was packed in bags and weighed, the loose quantity was estimated through eye estimation. The revenue argued that the shortage was accurately calculated for the bagged quantity, but eye estimation was used for loose sponge iron, which was admitted by the appellant.

4. The Tribunal found merit in the appellant's argument that demand cannot be raised solely on eye estimation basis for loose sponge iron. As no proper weighment was conducted for the loose quantity, the demand was set aside along with consequential penalties, and the appeals were allowed.