2015 (10) TMI 2518 - AT - Central Excise

Variation of actual stock of sugar and baggase with the records Held that variation tolerable as there is bound to be some error in the stock taking as the element of estimation is present appeal allowed for this issue Baggase and press mud not excisable - extended period of limitation not invokable on scrap sold proper invoices issued,all records maintained on sale of scrap normal period of duty imposed duty on tin deleted penalty imposed set aside appeal allowed in part.

Summary

Issues:
1. Stock discrepancies of molasses and sugar.
2. Non-reversal of Cenvat credit on exempted products.
3. Duty on clearance of scrap.
4. Imposition of penalty and interest.

Analysis:

Issue 1: Stock Discrepancies of Molasses and Sugar
The inspection revealed an excess stock of molasses and a shortage of sugar. The appellant contested the findings, arguing that the discrepancies were normal variations due to ongoing production processes. The appellant provided evidence of monitoring by State Excise Authority and corrections made in stock registers. The Tribunal found the discrepancies to be minor and attributed them to estimation errors during stocktaking. Consequently, the duty confirmed on sugar and molasses was set aside.

Issue 2: Non-Reversal of Cenvat Credit on Exempted Products
The appellant was found to have cleared exempted products without reversing the proportionate Cenvat credit on inputs, as required by Rule 6 of Cenvat Credit Rules. However, the Tribunal referred to a ruling by the Allahabad High Court and the Supreme Court, stating that no duty is required to be paid on waste products like press mud and bagasse. Therefore, the duty confirmed on these items was deemed non-excisable.

Issue 3: Duty on Clearance of Scrap
Regarding the duty on scrap sales, the appellant argued that no Cenvat credit was taken on the capital goods involved in the scrap. The Tribunal noted that the scrap transactions were duly recorded in the books of accounts and that the duty on tin scrap, arising from dismantling hutments, was unfounded. The duty confirmed on the sale of MS scrap was upheld for the normal period, but the duty on tin scrap was deleted.

Issue 4: Imposition of Penalty and Interest
The Tribunal found no element of suppression in the appellant's actions, as proper invoices were raised, and transactions were reflected in balance sheets. Consequently, the extended period of limitation was deemed inapplicable. The penalty imposed was set aside, and the impugned order was modified accordingly, allowing the appeal in part.

In conclusion, the Tribunal ruled in favor of the appellant on various issues, setting aside duties on sugar, molasses, and certain scrap items, while also overturning the penalty and interest imposition. The appellant was granted consequential benefits as per the law.