2013 (11) TMI 1077 - AT - Central Excise

Clandestine removal of goods - Shortage of Poly Propylene Granules Disallowance of credit Held that - The input contents 97.85% in finished goods was ascertained on the basis of the statement of the factory in charge of appellants - The appellants could not refute this fact by any evidence Thus disallowance of credit is justified - Regarding demand of duty confirmed in respect of 23,711 kgs of PP materials/scrap, the Advocate was not able to produce any evidence for receipt of the processed materials Thus, the quantity of 23,711 kgs of PP materials was not received, which was unaccounted clearance and the valuation of the goods was not raised before the adjudicating authority Decided against Assessee.

Summary

Issues involved: Disallowance of modvat credit on Poly Propylene (PP) granules, demand of duty and penalty on unaccounted PP granules sent to job worker, rejection of appeals by the Commissioner (Appeals).

Analysis:
1. The appellant, engaged in manufacturing plastic containers, availed modvat credit on PP granules. Central excise officers found a shortage of 5.6 MTs of PP granules during stock verification, leading to a demand of duty and penalty. The original authority disallowed the credit availed on the shortage and on unaccounted PP granules. A penalty was imposed under relevant sections of the Central Excise Act, 1944.

2. The appellant did not dispute the denial of credit on the shortage but contested the disallowance of credit on unaccounted PP granules. The advocate argued for a higher input content percentage in finished goods, challenging the basis of determination at 97.85%. Additionally, the lack of proper recording of returned scrap material and party names was highlighted, along with the absence of valuation details in the show cause notice.

3. The adjudicating authority accepted a 97.85% input content in finished goods and detected a shortage of 13.57 MTs, differing from the alleged quantity in the show cause notice. The appellant failed to provide evidence supporting the claimed 98.50% input content. The demand was confirmed based on the lower input content percentage derived from the appellant's statement.

4. Regarding the demand of Rs. 1,42,266, the appellant could not substantiate receipt of processed material from job workers other than one. Some job worker names in records were untraceable. The absence of a valuation dispute raised earlier was noted.

5. The Tribunal upheld the disallowance of credit on unaccounted PP granules and the duty demand on unreceived material, citing the lack of evidence refuting the determined input content percentage and the unaccounted clearance of PP materials. The absence of evidence for receipt of processed materials and the lack of valuation dispute raised earlier further supported the decision.

6. After considering submissions, the Tribunal found no reason to interfere with the Commissioner (Appeals) order, upholding the rejection of the appeal filed by the appellant. The decision was made after a thorough review of facts and arguments presented by both parties.