2009 (4) TMI 908 - AT - Central Excise

Summary

Issues Involved:
1. Shortage and excess of raw materials and finished goods in M/s. JSPL and M/s. JSEP.
2. Duty demand and penalty imposition on M/s. JSPL and M/s. JSEP.
3. Confiscation of excess stock and imposition of redemption fine.

Summary:

Issue 1: Shortage and excess of raw materials and finished goods in M/s. JSPL and M/s. JSEP

1.1. During the visit on 25.6.99, shortages and excesses were found in both M/s. JSPL and M/s. JSEP. Specifically, M/s. JSPL had shortages of 28 MT of Pig Iron, 128.58 MT of C.I. Scull Scrap, and 416 pieces of back plate and clips, along with excesses of 13.43 MT of runners & risers and various finished goods. M/s. JSEP had shortages of 56.915 MT of Pig Iron and 232.125 MT of C.I. Scull scrap.

1.2. On 18.8.2000, further discrepancies were found in M/s. JSPL, including shortages of 12.12 MT of Pig Iron and 153.36 MT of C.I. Scull Scrap, and 1203 pieces of anchor plates. No discrepancies were found in M/s. JSEP on this date.

Issue 2: Duty demand and penalty imposition on M/s. JSPL and M/s. JSEP

2.1. The show cause notices (SCNs) issued to M/s. JSPL and M/s. JSEP led to adjudications confirming duty demands and penalties. The Commissioner(Appeals) modified the penalties and redemption fines imposed on M/s. JSPL, reducing them significantly.

2.2. The Commissioner(Appeals) set aside the Additional Commissioner's order against M/s. JSEP, stating that there was no requirement to modify the recorded balance of goods found short during stock checking.

Issue 3: Confiscation of excess stock and imposition of redemption fine

3.1. The confiscation of excess stock and imposition of redemption fines were upheld by the Commissioner(Appeals) for M/s. JSPL, with modifications to the penalties and fines.

Detailed Judgment:

Appeal No. E/659/07-SM (M/s. JSEP)

3.2. The Department's appeal against M/s. JSEP was dismissed. The Commissioner(Appeals) held that the Department cannot ask the manufacturer to correct the quantum of shortage after demanding duty based on the book entries. The logic was that once the duty is demanded treating the book entries as correct, the manufacturer should not be required to adjust the book balance.

Appeals No. E/1178-79/07-SM (M/s. JSPL)

4.1. The shortages of finished goods detected on 25.6.99 and 18.8.2000 were upheld, with no satisfactory explanation provided by M/s. JSPL.

4.2. The duty demand for the shortage of 12.12 MT of Pig Iron and 153.36 MT of C.I. Scull Scrap detected on 18.8.2000 was upheld due to lack of explanation.

5. The duty demand for 28 MT of Pig Iron and 128.58 MT of C.I. Scull Scrap detected on 25.6.99 was set aside, as the excess finished goods were found to be manufactured from the raw materials found short. However, the duty demand for the shortage of 416 back plates and clips was upheld.

6. The confiscation of the finished goods and cenvated inputs found excess was upheld due to lack of satisfactory explanation.

Conclusion:

7. The impugned order-in-appeal for Appeals No. E/1178-79/07 was modified to the extent mentioned, and the appeal No. E/659/07-SM against the Commissioner(Appeals) order No. 122-RPR-II/07 was dismissed.