2013 (9) TMI 824 - AT - Central Excise

Valuation - place of removal - Short Payment of Duty Goods Sold to Agent s Premises - Assesse were manufacturers of Mild Steel and stainless steel Plates and Slabs chargeable to central excise duty - Revenue was of the view that the duty was required to be paid on the price at which the goods were sold from consignment agent s premises which would include the element of freight from the factory gate to the consignment agent s premises, the duty was being paid on lower value and as such, the short duty paid on this account Held that - Prima facie, the duty had not been paid on the price at the consignment agent premises and as such, the duty demand on this count appears to be on strong footing - In terms of the provisions of Section 4 of the Central Excise Act, 1944 r.w the Central Excise Valuation Rules, 2000, in case the goods were cleared to consignment agents premises from where the same were sold, it was the consignment agent s premises which was to be treated as the place of removal and accordingly, the assessable value would the price of the goods from the consignment agent s premises at the time of record, which would include all the expenses incurred upto the consignment agents premises including the transportation expenses incurred upto that point. Shortage of Stainless Steel Slabs Balance Recorded Held that - The demand in respect of shortage of Stainless Steel Slabs and Plates vis- -vis the balance recorded in the RG-I register - From the records, it was seen that the stock taking had been done in the presence of the appellant s representatives and at that time, they had expressed their full satisfaction with the method adopted for determination of weight of the finished goods on the basis of the dimensions of the slabs/ plates - The appellant were recording the weight of finished goods in the RG-I register on the same basis - Prima Facie appellant s plea cannot be accepted. Difference between the CENVAT credit - Held that - Imported Mild Steel Slabs and H. R. Coils, which had been cleared as such and the amount actually paid at the time of clearance which was the duty on the transaction value - Since in respect of the clearance of the cenvated items as such an amount equal to the cenvat credit actually availed was required to be paid, this demand was also on strong footing. Difference between the Raw Materials Dispatched - Held that - According to the department, a huge quantity of raw materials sent to the job worker was not accounted for - The appellant s contention was that just on this basis, the allegation of clandestine removal of the finished goods cannot be made - looking to the evidence on record in support of this allegation, some conditions have to be imposed to safeguard the interest of revenue in respect of this demand. Waiver of Pre Deposit - Stay Application Assessee was directed to submit pre-deposit stay granted partly.

Issues Involved:
1. Shortage of Stainless Steel (SS) Slabs and Plates.
2. Duty on goods sold through consignment agents.
3. Short payment of duty on imported Mild Steel (MS) Slabs and Hot Rolled (HR) Coils.
4. Wrong availment of CENVAT credit.
5. Illicit clearance of goods sent for job work.
6. Confiscation of seized goods and imposition of penalties.

Detailed Analysis:

1. Shortage of Stainless Steel (SS) Slabs and Plates:
The demand of Rs.39,40,559/- was based on the shortage of SS Slabs and Plates recorded in the RG-I register. The weight determination was done using standard norms, and the appellant's representatives were satisfied with this method during stock-taking. The Tribunal found the appellant's plea of estimation without basis to be prima facie unacceptable.

2. Duty on Goods Sold Through Consignment Agents:
The demand of Rs.95,48,586/- pertained to goods sold from consignment agent's premises. According to Section 4 of the Central Excise Act, 1944, the consignment agent's premises should be treated as the 'place of removal,' and the assessable value should include all expenses up to that point. The Tribunal found the department's demand on this count to be prima facie strong.

3. Short Payment of Duty on Imported MS Slabs and HR Coils:
The demand of Rs.1,91,16,562/- arose from the difference between the CENVAT credit availed and the duty paid on the transaction value of imported MS Slabs and HR Coils cleared as such. Since the appellant was required to pay an amount equal to the CENVAT credit availed, the Tribunal found this demand to be prima facie strong.

4. Wrong Availment of CENVAT Credit:
The appellant admitted to wrong availment of CENVAT credit amounting to Rs.2,68,22,040/-, which was reversed during the investigation. The remaining disputed amount of Rs.3,60,70,241/- was contested on the grounds of short receipt of inputs. The Tribunal noted conflicting claims regarding the supply of relied-upon documents and decided that this issue required in-depth examination during the final hearing.

5. Illicit Clearance of Goods Sent for Job Work:
The duty demand of Rs.5,68,07,130/- was based on the discrepancy between the raw materials sent for job work and the finished goods received back. The appellant contended that this discrepancy alone could not substantiate the allegation of clandestine removal. The Tribunal acknowledged the need for a detailed examination of this issue but decided that some conditions were necessary to safeguard the revenue's interests.

6. Confiscation of Seized Goods and Imposition of Penalties:
The Commissioner had ordered the confiscation of seized MS Slabs and Plates valued at Rs.38,75,359/- with an option for redemption on payment of a fine. Penalties were also imposed under Section 11AC of the Central Excise Act, 1944, and Rule 26 of the Central Excise Rules, 2002. The Tribunal directed the appellant company to deposit an additional amount of Rs.2 Crores, in addition to the Rs.5,70,05,598/- already deposited, to safeguard the revenue's interests.

Conclusion:
The Tribunal required the appellant to deposit a total of Rs.7,70,05,598/- to secure the revenue's interests and granted a stay on the recovery of the balance amount until the disposal of the appeals. The compliance was to be reported by 17.4.2013.

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