2014 (8) TMI 181 - AT - Central Excise

Waiver of predeposit of duty - difference between the quantity issued to production and the quantity emerging as finished goods - Held that - From the SCN that there is variation of percentage of loss year wise. The percentage of loss during the retail packing is inevitable. But there must be consistency on the percentage of loss which would be examined at the time of appeal hearing at length. Prima facie, I find that there is loss of 4.51% in the year 2011-12 which is much higher than the permissible loss as mentioned in the Act - Conditional stay granted.

Summary

Issues:
Waiver of predeposit of duty for the applicant.

Analysis:
The applicant, engaged in manufacturing scouring powder and detergent washing powder, filed for waiver of predeposit of duty amounting to Rs. 20,20,478 along with interest and penalty. The issue arose when a difference was noted between the quantity issued for production and the quantity of finished goods during an audit for the period 2007-08 to 2011-12. The adjudicating authority confirmed the duty demand along with interest and penalty, which was upheld by the Commissioner (Appeals).

The applicant's representative argued that the difference in quantity was due to various factors like moisture loss, transit loss, handling loss, floor waste, and de-dusting waste. Referring to the Standards of Weights & Measures (Packaged Commodities) Rules, 1977, the representative highlighted permissible loss percentages. On the other hand, the Revenue's representative pointed out the increasing percentage of loss over the years, questioning the applicant's explanation for the same. The Revenue argued that the applicant did not disclose the shortage in their returns, indicating a lack of transparency.

Upon reviewing the submissions, the judge noted the variation in the percentage of loss year-wise and emphasized the need for consistency in the percentage of loss during retail packing. The judge found a loss of 4.51% in the year 2011-12, exceeding the permissible limit. The issue of limitation raised by the applicant's advocate would be further examined during the appeal hearing. As a decision, the judge directed the applicant to predeposit Rs. 4,00,000 within 8 weeks. Upon this deposit, the balance amount of duty, interest, and penalty would be waived, and recovery stayed until the appeal's disposal. Compliance was to be reported on a specified date.