2013 (11) TMI 1288 - AT - Central Excise

Method of weightment of goods Actual Method OR Estimation method Waiver of pre-deposit - Held that - There is no dispute that the weighment of the raw material MS Ingots and billets had been done by estimation only on the basis of average weight of each type of ingots on the basis of its cross sanctioned area and length and in the same manner the weight of finished product- MS Bars had been determined - When the weighment had been done by estimation and not by actual weighment, prima facie, it would not be correct to accuse the appellant of non-accountal of raw material and finished product and that too intentional - the order upholding the confiscation and imposition of penalty, does not appeared be sustainable - Prima facie the appellant have a strong case in their favour Thus, the requirement of pre-deposit of penalty waived till the disposal Stay granted.

Issues:
1. Confiscation of excess stock of raw material and finished goods.
2. Imposition of penalty under Rule 25 of Central Excise Rules.
3. Appeal against the order of confiscation and penalty imposition.
4. Stay application for waiver of pre-deposit of penalty.

Analysis:

Issue 1: Confiscation of excess stock of raw material and finished goods
The case involved the appellant, a manufacturer of MS Mild Steel Bars, whose factory was visited by DGCEI officers leading to the discovery of excess stock of raw material and finished products. The department alleged an excess of 96.131 M.T. of raw material and 52.118 M.T. of finished products. The stock was seized, and after a show cause notice, the Jurisdictional Assistant Commissioner ordered confiscation of the entire stock under Rule 25 of Central Excise Rules. The appellant contended that the stock taking was done without actual weighment, only by estimation, and the Managing Director had agreed under pressure. The Tribunal found that the weighment was done by estimation, not actual weighment, leading to a negligible difference between actual records and estimated weights. The Tribunal held that accusing the appellant of non-accountal of goods intentionally was not justified, and thus, the order of confiscation was not sustainable.

Issue 2: Imposition of penalty under Rule 25 of Central Excise Rules
In addition to the confiscation, a penalty of Rs. 4,52,176/- was imposed on the appellant under Rule 25. The appellant appealed against this penalty imposition. The Tribunal considered the arguments presented by both sides. The appellant argued for a waiver of pre-deposit of penalty citing a strong prima facie case in their favor. The Departmental Representative opposed the stay application, emphasizing that the Managing Director had agreed to weighment by estimation and could not retract the decision. However, the Tribunal found that since the weighment was done by estimation and not actual weighment, the penalty imposition was not justified. Therefore, the requirement of pre-deposit of penalty was waived, and recovery was stayed till the disposal of the appeal.

Issue 3: Appeal against the order of confiscation and penalty imposition
The appellant had filed an appeal against the order of confiscation and penalty imposition. The Commissioner (Appeals) had dismissed the appeal, leading to the filing of the present appeal. The Tribunal, after considering the submissions from both sides, found in favor of the appellant due to the lack of actual weighment and the estimation method used. The Tribunal allowed the stay application and disposed of the miscellaneous application regarding the financial condition of the appellant.

Issue 4: Stay application for waiver of pre-deposit of penalty
The Tribunal accepted the miscellaneous application for additional submission regarding the financial condition of the appellant. After considering the arguments and perusing the records, the Tribunal found that the weighment had been done by estimation, not actual weighment. Consequently, the Tribunal waived the requirement of pre-deposit of penalty for the appeal hearing and stayed the recovery of the penalty until the appeal's disposal. The stay application was allowed, and the miscellaneous application was disposed of.

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