2008 (11) TMI 507 - AT - Central Excise

Summary

Issues involved: Stay petition against Order-in-Appeal confirming demand and penalty u/s Central Excise Tariff Act, 1985.

Details of the judgment:

Issue 1: Demand confirmation based on Cenvat credit reversal for inventory shortages.
The demand was confirmed due to inventory shortages of M/s. M.S. Drums in various years. The lower authorities held that the credit taken was not used in manufacturing final products, making it recoverable.

Issue 2: Applicant's contention on duty credit and stock taking.
Applicants argued they took duty credit based on supplier documents for received quantity. They stated that annual stock taking is for streamlining stock, not for demanding duty on shortages. They highlighted reasons for shortages like evaporation, handling wastage, and scale weight variations.

Issue 3: Department's position and legal references.
The S.D.R. supported lower authorities' findings and referenced a Tribunal decision. However, the Tribunal's decision cited was not directly applicable to the current case.

Judgment and Conclusion:
The Tribunal noted the minimal shortage during stock taking and the inputs were used within the factory. It was not alleged that inputs were cleared without duty payment. Precedents were cited to establish reasonableness of shortages. The Tribunal found a strong case for waiving the duty pre-deposit and penalty, staying recovery pending appeal disposal.