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2011 (8) TMI 123 - AT - Central ExciseDemand - Classification - shortage of Lamination material - Cenvat credit - Held that appellant s plea that just on the basis of shortage of Lamination material, continers and Zippers, it cannot be presumed that the missing material had been used for manufacture of unaccounted Gutka cleared clandestinely without payment of duty. In view of this, duty demand of Rs.1,53,239/- is not sustainable - The shortage of Cenvat Credit availed on Lamination and Zippers maybe due to short receipt of the same - Decided in favor of the assessee Regarding penalty - Rule 26 of Central Excise Rules - no evidence has been produced by the Department that they were involved in acquiring possession of or in transporting, removing, selling or purchasing of any excisable goods or in any other manner dealing with excisable goods, which they knew or had reason to believe were liable for confiscation - Appeal are allowed
Issues involved:
Central Excise duty demand based on shortages of raw materials, Cenvat Credit demand, penalty imposition under Central Excise Act and Rules. Central Excise Duty Demand: The case involved allegations of clandestine clearance of goods without duty payment based on shortages of raw materials. The jurisdictional Central Excise officers found discrepancies in the stock of raw materials and finished products during a factory visit. The appellant contested the duty demand, arguing that shortages of certain materials like Laminates and Zippers were due to inevitable wastage in the manufacturing process. The Commissioner(Appeals) upheld the duty demand of Rs.1,53,239/- but set aside the demand of Rs.12,37,500/-. The Tribunal ruled that the duty demand of Rs.1,53,239/- was not sustainable as there was no evidence of shortages in essential raw materials like Supari, lime, Kattha, and Tobacco. Therefore, the duty demand was set aside. Cenvat Credit Demand: The Cenvat Credit demand of Rs.40,022/- was based on shortages of Lamination materials and Zippers. The appellant argued that the shortages were due to wastage, but failed to provide evidence to support this claim. The Tribunal noted that if the shortages were due to wastage, they should have been accounted for in the books of accounts. As there was no evidence to support the appellant's claim, the Tribunal upheld the Cenvat Credit demand of Rs.40,022/- along with interest. Penalty Imposition: The appellant was subjected to penalties under Section 11AC of the Central Excise Act, 1944, and Rule 26 of the Central Excise Rules, 2004. The penalties were imposed on the appellant company as well as on the authorized representatives. The Tribunal reduced the penalty on the appellant company from Rs.14,30,761/- to Rs.20,000/- since only the Cenvat Credit demand of Rs.40,022/- was upheld. Additionally, the penalties imposed on the authorized representatives were set aside as there was no evidence to prove their involvement in any excise duty-related offenses. Therefore, the penalties on the authorized representatives were deemed unjustified and set aside. In conclusion, the Tribunal partly allowed the appeal of the appellant company by setting aside the duty demand of Rs.1,53,239/-, reducing the penalty on the appellant company to Rs.20,000/-, and setting aside the penalties imposed on the authorized representatives. The Commissioner(Appeals) order regarding the Cenvat Credit demand of Rs.40,022/- was upheld. The Tribunal's decision was pronounced on 12.08.2011.
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