2008 (2) TMI 706 - AT - Central Excise

Shortage of inputs - demand on the basis of estimation - Held that - when the method of weighment was accepted by the assessee and admitted the shortage, objection to the verification at later stage is not maintainable - In the present case, at the time of verification endorsement was made on the Panchnama that weight of sponge iron is arrived at by counting the bags and not by actual weighment. As the shortage is arrived at on estimation basis, there is no merit in the appeal - appeal dismissed.

Summary

Issues:
1. Appeal against demand of duty and penalty for shortage of inputs.

Analysis:
The appeal before the Appellate Tribunal CESTAT, NEW DELHI was filed by the Revenue against an order passed by the Commissioner (Appeals) setting aside the demand of duty and penalty in relation to a shortage of 348.4 M.T. of sponge iron, an input. The officers of Revenue found the shortage during a visit to the respondent's premises, leading to the adjudicating authority confirming the demand and imposing a penalty. The Commissioner (Appeals), however, overturned this decision after considering the evidence on record, highlighting that the weighment of sponge iron was based on counting of bags, not physical weighment, making estimation grounds insufficient for the demand.

The Revenue contended that despite the weighment method being based on counting of bags, a representative of the respondent had admitted to the shortage. They relied on precedents like the case of CCE, Chandigarh v. Nabha Steels Ltd. and Majestic Auto Ltd. v. CCE, Ghaziabad, to support their argument that since the correctness of the Panchnama was not disputed on the spot and the shortage was admitted, the demand was valid. However, the Tribunal's decision in those cases emphasized that when the weighment method was accepted by the assessee and shortage admitted, objections at a later stage were not maintainable.

The Tribunal's analysis of the present case revealed that during the physical verification, the authorized representative had noted that the weight of sponge iron was determined by counting bags, not by actual weighment. Importantly, there was no explicit admission by the respondents that the goods were short and cleared without duty payment. Drawing from the precedents cited by the Revenue, the Tribunal found no merit in the appeal, as the shortage was estimated and not based on a clear admission of deficiency. Consequently, the appeal was dismissed by the Tribunal in favor of the respondent.