2010 (8) TMI 600 - AT - Central Excise

Waiver of pre deposit - Notification No. 8/2003 - Differential duty - there is no dispute relating to the opening balance of kraft paper as on 1-4-2006 and also the quantity of kraft paper procured by the appellants during the entire year which is 6,90,759 kgs - The claim that they were not issuing specific and know quantity for production appears to be an after thought requiring them to work out the quantity issued backwards from the quantity of final products manufactured - The explanation given regarding the figures mentioned in the tally sheet being not authentic is not acceptable. The reliance placed by the department on this figures for demand of duty cannot be faulted In the present case, on perusal of the Show Cause Notice it is found that no such evidence about clandestine removal is being relied upon. Therefore, the penalty equal to the duty demand confirmed may not be warranted - Decided against the assessee

Summary

Issues:
Dispute over quantity of inputs for duty payment and credit reversal under Notification No. 8/2003 for corrugated box manufacturing.

Analysis:
The case involved an appeal against the Commissioner (Appeals) order regarding the reversal of credit and duty payment by a manufacturer of corrugated boxes under sub-heading 4819 12 00. The appellants used duty paid kraft paper as inputs and availed the benefit of Notification No. 8/2003. The dispute arose from the closing stock of kraft paper as on 31-3-2007, with discrepancies in the quantity reported by the appellants and found by the audit officers. The original authority upheld the duty demand and penalty, which was confirmed by the Commissioner (Appeals).

The appellants contended that the closing balance adopted for duty payment was incorrect due to erroneous conversion ratios in the reconciliation statement. They argued that the department did not verify the conversion ratios and dismissed their reconciliation statement. The appellants also raised concerns about the production/clearance figures if the department's closing balance was accepted. They sought setting aside of the duty demand and penalty, emphasizing the lack of evidence of clandestine removal of inputs.

On the other hand, the department argued that the appellants failed to maintain proper records, leading to revisions in figures. They supported the use of the tally sheet recovered from the premises to determine the closing balance and upheld the duty demand imposed by the original authority and confirmed by the Commissioner (Appeals).

Upon considering both sides' submissions and records, the Tribunal found no dispute regarding the opening balance and quantity of kraft paper procured. The Tribunal rejected the appellants' method of determining the quantity issued based on final products and upheld the duty demand and interest. However, the Tribunal noted that without evidence of clandestine removal, the penalty equal to the duty demand was not justified. Therefore, the penalty was reduced from Rs. 2,40,162 to Rs. 50,000.

In conclusion, the Tribunal upheld the duty demand and interest while reducing the penalty imposed, emphasizing the appellants' obligation to account for duty paid inputs and the lack of evidence supporting clandestine removal.