2009 (10) TMI 690 - AT - Central Excise

Summary

Issues: Shortage of goods, non-reversal of credit, suppression of manufacture and clearance, imposition of penalty, appeal against demand and penalty.

In the present case, the appellants, who are manufacturers of Nylon Monofilament Yarn, were found to have a shortage of Monofilament Yarn Fishnet and had not reversed credit for exempted clearances during a visit by officers. The duty on shortages amounted to Rs. 37,002 and non-reversal of credit was Rs. 8,657. The assessee admitted the shortages and non-reversal, paying the entire amount through a TR-6 challan. A show-cause notice was issued proposing recovery and imposition of penalty for suppression of manufacture and clearance of goods without expunging the credit of duty on exempted goods. The Assistant Commissioner confirmed the demand, interest, and imposed penalties under relevant sections of the Central Excise Act. The Commissioner (Appeals) upheld the demand but reduced the penalty under Section 11AC and set aside the penalty under Rule 25, leading to the current appeal.

During the proceedings, the assessee had admitted to clerical mistakes in a letter dated 30-3-2001, providing a detailed stock reconciliation statement for each month during the relevant period. The demand was deemed sustainable based on this admission. The extended period of limitation was upheld as the assessee had not maintained proper records, leading to the detection of shortages and non-reversal only during the visit by the Preventive Wing of the Central Excise Department. The burden of proof shifted to the assessees to demonstrate that they had not availed credit of duty paid on Monofilament Yarn in the manufacture of exempted goods, which they were unable to do. Consequently, the impugned order was upheld, and the appeal was rejected.

The judgment was pronounced on 7-10-2009 by Ms. Jyoti Balasundaram, J, at the Appellate Tribunal CESTAT CHENNAI. The decision highlighted the importance of maintaining accurate records and the consequences of failing to do so in cases of shortages and non-reversal of credit, emphasizing the burden of proof on the assessees in such situations.