2013 (5) TMI 799 - AT - Central Excise

Duty demand - Unavailability of Mixer Log Book - Buffer stock - Held that - Factory was under production during the two spells for which Mixer Log Books are not available. In such a situation department cannot deny benefit of Modvat credit on PVC resin used in the production. Since exact quantity is not known, in our view certain procedure can be adopted in the instant case to estimate the reasonable quantity of Inputs used. - Based upon this, quantity consumed will be estimated and adjusted in the computation of shortage - explanation and estimated quantity of buffer stock appear to be reasonable, keeping in view the daily consumption of PVC Resin. Department has also not disputed that buffer stock was kept. However demand is from 1-10-1994 to 18-6-1999. Appellant has not adduced any evidence to support that they have started keeping the buffer stock only during this period. Since the practice would be followed even earlier benefit of this factor cannot be extended. - adjudicating authority directed to recompute the difference in quantity keeping in view above and thereafter compute the demand. We also note that department has not produced any evidence about non-receipt of inputs or diversion of inputs but only has stated that there are only two possibilities and the matter pertains to 1994-1999. Appellant has also not been able to give any satisfactory explanation, particularly, in view of the nature of product as also the fact sweepage/spillage waste, lumps, etc., were all already being accounted. Under the circumstances, we do not find any justification to impose penalty under Section 11AC. - Decided in favour of assessee.

Summary

Issues:
1. Discrepancy in Modvat credit on PVC Resin.
2. Unavailability of Mixer Log Book and buffer stock of PVC Resin.

Analysis:

Discrepancy in Modvat Credit:
The case involves a discrepancy in Modvat credit on PVC Resin consumed by the appellant. The appellant, a manufacturing unit, faced a demand notice due to a difference in the quantity of PVC Resin shown as issued and consumed. The Commissioner confirmed the demand, leading to an appeal before the Tribunal. After re-examination, the quantity on which credit was denied reduced significantly. The appellant raised concerns about two issues not accepted by the authority. The first issue pertained to the unavailability of Mixer Log Book for specific periods, leading to uncertainty in actual consumption. The second issue related to a buffer stock of PVC Resin kept in the production section due to store department closures. The appellant argued that the shortage was negligible considering these factors.

Unavailability of Mixer Log Book and Buffer Stock:
The appellant contended that during periods without Mixer Log Book availability, the factory was operational, justifying the use of raw material. The absence of specific details should not lead to the denial of Modvat credit. The appellant claimed to maintain a buffer stock of PVC Resin, which was not disputed by the department. However, the department raised concerns about the lack of evidence supporting the initiation of this practice during the relevant period. The Tribunal suggested methods to estimate the reasonable quantity of inputs used during periods without Mixer Log Book, emphasizing the need to adjust the shortage computation accordingly.

Decision and Conclusion:
The Tribunal directed the adjudicating authority to recompute the quantity difference considering the explanations provided by the appellant. It noted the lack of evidence regarding non-receipt or diversion of inputs and emphasized the appellant's inability to provide a satisfactory explanation, especially given the nature of the product and existing accounting practices. The Tribunal found no justification for imposing a penalty under Section 11AC. Consequently, the appeal was allowed by way of remand, providing detailed guidelines for reevaluation and computation of the demand.

This comprehensive analysis highlights the key issues, arguments presented by both parties, the Tribunal's considerations, and the final decision regarding the Modvat credit discrepancy and related concerns.