2015 (5) TMI 162 - AT - Central Excise

SSI Exemption - CENVAT Credit - Clandestine removal of goods - Held that - As regards, non-accountal of 780 KG of plastic scrap found in the premises of M/s Annapurna Industries, there is no dispute that the same was not accounted for in the RG-1 Register. However, we are of the view that the appellant s plea that the same being intermediate product was meant for recycling and was exempted from duty under notification no. 67/95 CE and for this reason, the same was not accounted for in the RG-1 Register is acceptable. Accordingly, we hold that the confiscation of 780 KG of Plastic Scrap under Rule 25(1) of Central Excise Rule 2002 and imposition of penalty on M/s Annapurna Industries on that account is not sustainable and has to be set aside. - Decided in favor of assessee. As regards, the alleged removal of plastic containers by M/s Annapurna Industries to M/s Shivam Udyog - goods were not in fully finished condition and had been shifted to the adjacent premises of M/s Shivam Udyog on account of lack of space in M/s Annapurna Industries and as such the same cannot be said to have been cleared to M/s Shivam Udyog without payment of duty. In view of this, the duty demand of ₹ 9,398/- and confiscation of these goods has also to be set aside. Cenvat Credit - If the plastic granules had been cleared to job workers under job work challans on 08.09.2002 there is no explanation as to why the Authorized Signatory of the appellants was not aware about the same. Therefore, we hold that the Commissioner (Appeals) has correctly held that the plea of sending the plastic granules to job workers under job work challan are only an afterthought. However, we find that the amount of ₹ 2,90,613/- from M/s Annapurna Industries and the amount of ₹ 4,46,426/- demanded from M/s Shivam Udyog has been determined by adopting some value of the granules and calculating the duty on the same at rate of 16%, while in our view only the cenvat credit originally taken in respect of Granules would be payable which according to the appellant would be a much lesser amount. The cenvat credit attributable to 4125 KG of plastic Granules found short in the premises of M/s Annapurna Industries and 15,375 KG of Plastic Granules found short in the factory premises of M/s Shivam Udyog can be determined on the basis of the invoices issued by GAIL under which M/s JJ Packagerr had received the consignments. - Decided against the assessee.

Summary

Issues:
1. Alleged clearance of goods without payment of duty between two units.
2. Shortage of plastic granules in both units.
3. Confiscation of unaccounted scrap and goods.
4. Adjudication by Joint Commissioner and Commissioner (Appeals).
5. Plea of sending plastic granules to job workers.
6. Imposition of penalties and duty demands.

Issue 1: Alleged clearance of goods without payment of duty between two units

The appellant units were found adjacent to each other during a visit by the Central Excise Officer. Finished goods from one unit were found in the premises of the other unit without proper documentation, leading to a duty demand of &8377; 9,398. The Joint Commissioner confirmed this demand along with penalties. The Commissioner (Appeals) upheld this decision, leading to the filing of appeals.

Issue 2: Shortage of plastic granules in both units

During the same visit, a shortage of plastic granules was noted in both units, leading to demands of &8377; 2,90,613 and &8377; 4,46,426 against the units. The appellants claimed that the granules were sent to job workers for further processing, providing job work challans as evidence. The authorities, however, deemed these challans fabricated. The Commissioner (Appeals) upheld the demands, resulting in the appeals being filed.

Issue 3: Confiscation of unaccounted scrap and goods

Unaccounted scrap and goods were confiscated, and penalties were imposed based on the findings during the visit. The appellant argued that the scrap was meant for recycling and thus exempt from duty, which was accepted. However, the duty demand and confiscation of goods were challenged.

Issue 4: Adjudication by Joint Commissioner and Commissioner (Appeals)

The Joint Commissioner confirmed duty demands, penalties, and confiscations against the appellants. The Commissioner (Appeals) dismissed the appeals, leading to further challenges by the appellants.

Issue 5: Plea of sending plastic granules to job workers

The appellants claimed that the shortage of plastic granules was due to sending them to job workers, supported by job work challans. However, the authorities found this explanation unconvincing, leading to a dispute over the authenticity of the job work challans and the subsequent demands.

Issue 6: Imposition of penalties and duty demands

The appellants argued that the duty demands were calculated at a higher rate and should be based on the actual value of the granules. The authorities defended their calculations and penalties, leading to a remand for re-quantification of the cenvat credit demand based on the original invoices. The confiscation of goods, penalties, and some duty demands were set aside pending re-evaluation by the adjudicating authority.

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