2008 (10) TMI 542 - AT - Central Excise

Issues Involved:
1. Excess receipt and use of raw materials.
2. Non-accounting of raw materials and production.
3. Clandestine removal of goods.
4. Valuation of goods.
5. Applicability of legal precedents.

Detailed Analysis:

1. Excess Receipt and Use of Raw Materials:
The appellant, a manufacturer of ferro silicon, was found to have discrepancies in the quantity of raw materials recorded in statutory registers versus private records. The private records indicated receipt and issue of more raw materials, particularly quartz, than what was documented officially. The appellant argued that the excess quartz included unusable smaller-sized pieces, which were not accounted for in the statutory records and were discarded. However, the Tribunal found this explanation unconvincing due to the lack of evidence supporting the claim of discarding significant quantities of quartz. Additionally, the private records showed not only excess receipts but also the issue of higher quantities, implying usage in production.

2. Non-accounting of Raw Materials and Production:
The Tribunal observed that the appellant systematically suppressed the accounting of raw materials in statutory records. The private records indicated higher quantities of charcoal and steel scrap being used than what was documented. The appellant's claim that substandard steel scrap was returned to the sender without being accounted for was found to be unconvincing. The Tribunal concluded that the appellant procured excess raw materials and used them in production without proper accounting.

3. Clandestine Removal of Goods:
The Tribunal noted that a consignment of 300 bags of ferro silicon was removed without payment of duty and without issuing an invoice. This was confirmed by the authorized signatory of the appellant and was not retracted. The Tribunal found this to be an indicator of the appellant's practice of clandestine removal of goods. The appellant's argument that no further investigation was conducted by the department was dismissed, as the initial evidence was deemed sufficient.

4. Valuation of Goods:
The appellant contended that the valuation of ferro silicon was adopted on the higher side at Rs. 30,000/- per MT, whereas lower approved prices prevailed during the relevant time. However, no price list was provided to support this claim, and the issue was not raised in the proceedings before the lower authorities. The Tribunal refused to entertain this plea at this stage.

5. Applicability of Legal Precedents:
The appellant relied on the decisions in the cases of George Varghese v. CCE and V.K. Thampy v. CCE, where demands of duty based on the shortage of one raw material were held unsustainable. However, the Tribunal found these decisions inapplicable as the facts of the present case involved systematic suppression of multiple raw materials and not just a single material.

Conclusion:
The appeal was rejected based on the findings that the appellant systematically suppressed the accounting of raw materials, used excess raw materials in production without proper documentation, and engaged in clandestine removal of goods. The Tribunal upheld the demand for duty and penalties imposed by the lower authorities.

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