2014 (12) TMI 366 - AT - Central Excise

Waiver of pre deposit - Clandestine removal of goods - Discrepancy in stock - Held that - The duty demand on account of shortage of the finished goods and cenvated raw material is based on the difference between the stock found on the officer s visit to the factory on 16/12/08 and the balance of finished goods and raw material recorded in the statutory registers as on 24/11/08, while for determining the actual shortage, the entries in the raw material register and finished goods register should have updated to 16/12/08. However, as regards the duty demand of about ₹ 14,00,000/- on 443.885 M.T. of MS Ingots, the same is based on the production slips pertaining to November 2008 and first fortnight of December 2008. Since, the power consumption figure for these periods are also available, the power consumption during November 2008 comes to 900 units per M.T. and the same for first fortnight December 2008 comes to about 500 units per M.T. The power consumption thus is in the range of 500 to 1000 units per M.T. as per the IIT, Kanpur study and, therefore, prima facie the production recorded in these slips appears to be the actual production and, as such, the duty demand for November 2008 and first fortnight of December 2008 based on production slips appears to be on stronger footing. Partial stay granted.

Issues Involved:
1. Alleged clandestine clearance of MS Ingots without payment of duty.
2. Alleged shortage of Cenvat credit availed raw materials.
3. Discrepancies in stock records and production slips.
4. Appeal against the order-in-appeal and stay application.

Analysis:

Issue 1: Alleged clandestine clearance of MS Ingots without payment of duty:
The case involved the appellant, a manufacturer of MS Ingots, who faced allegations of clandestinely clearing 460.10 M.T. of MS Ingots without paying duty. The production slips recovered from the factory indicated discrepancies in production and stock records, leading to a demand of Rs. 14,69,382/- in Central Excise duty. The appellant contested these allegations, arguing that the production slips alone were insufficient evidence of actual production and clearance. The Tribunal noted the power consumption norms and IIT Kanpur study, concluding that the duty demand based on production slips for November and December 2008 was well-founded. The appellant was directed to deposit an additional amount of Rs. 3,00,000/- to safeguard the Revenue's interests.

Issue 2: Alleged shortage of Cenvat credit availed raw materials:
Apart from the MS Ingots issue, there were allegations of shortages in Cenvat credit availed sponge iron and pig iron, amounting to Rs. 4,54,984/-. The appellant disputed these shortages, claiming that discrepancies arose due to incomplete stock records and updates. However, the Tribunal did not delve deeply into this issue in the judgment, focusing primarily on the MS Ingots clearance allegations.

Issue 3: Discrepancies in stock records and production slips:
The discrepancies between the stock found during the officers' visit and the recorded balances in the statutory registers raised concerns regarding the accuracy of stock records. The appellant argued that the stock updates were only until 24/11/08, leading to incorrect assessments of shortages. This issue intertwined with the allegations of clandestine clearance and formed a crucial aspect of the overall case.

Issue 4: Appeal against the order-in-appeal and stay application:
Following the rejection of the appeal by the Commissioner (Appeals), the appellant filed an appeal along with a stay application. The Tribunal considered the arguments presented by both sides, ultimately directing the appellant to make an additional deposit to proceed with the appeal. The judgment provided a detailed analysis of the contentions raised by the appellant and the Revenue, focusing on the evidentiary value of production slips and the power consumption data to determine the duty demand validity.

In conclusion, the judgment addressed the complex issues surrounding alleged clandestine clearances, discrepancies in stock records, and the evidentiary weight of production slips. The Tribunal's decision emphasized the importance of safeguarding Revenue interests while ensuring a fair hearing for the appellant during the appeal process.

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