2015 (11) TMI 1660 - AT - Central Excise

Shortage of finished goods and raw material - case of appellant is that the shortage quantity were not removed from the factory and were available in the factory during the course of stock taking. Thus, in absence of removal of goods, confirmation of the duty demand is not proper and appropriate - Held that - total weight found during the course of stock taking by the Central Excise officials was in the higher side than those recorded by the appellant in its daily stock account. Since the goods were found in excess in comparison to the available balance in the books of accounts, it cannot be said that there were shortage in the finished goods and raw materials, which were removed by the appellant without payment of duty, in clandestine manner - mere non-maintenance of record by the appellant cannot be a defensible ground for confirmation of the duty demand, alleging that the goods have been clandestinely removed from the factory - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Central Excise duty liability on alleged shortage of finished goods.
2. Cenvat credit liability on the shortage of raw materials.

Analysis:
1. The case involved the appellant, engaged in manufacturing MS Ingots, availing Cenvat credit of Central Excise duty on inputs. Central Excise officials found shortages in finished goods and raw materials during a factory visit. Subsequently, show cause proceedings were initiated, resulting in an adjudication order confirming duty liabilities and penalties. The Commissioner (Appeals) upheld the order, leading to the present appeal before the Tribunal.

2. The appellant's advocate argued that the shortage quantities were not removed from the factory and were present during stock taking, challenging the duty demand confirmation. On the contrary, the Revenue's representative highlighted the appellant's acceptance of the shortage in goods and voluntary duty payment, supporting the demand confirmation.

3. The Tribunal, after hearing both sides, noted discrepancies in the stock taking where goods were found in excess compared to recorded balances. It was observed that there was no evidence of goods being clandestinely removed without duty payment. The Tribunal emphasized that Excise duty is levied on manufactured and cleared goods, and the mere absence of records does not justify confirming duty demands based on clandestine removal allegations.

4. Consequently, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal in favor of the appellant. The decision provided for consequential relief, if applicable, in accordance with the law. The judgment was dictated and pronounced in open Court by the Member (J) of the Appellate Tribunal CESTAT NEW DELHI.