2016 (4) TMI 542 - AT - Central Excise

Recovery of incorrectly taken cenvat Credit - Shortages found in the stock of certain static converters - Non addition of 15% to the input value & making adjustment of the excess quantity of LG static converter found during stock - Held that - Adjudicating authority while deciding the issue in remand proceeding, allowed appellants contention on 15% value addition & reduced the duty & penalty amount to ₹ 2,39,474/-. First appellate authority while deciding the issue further gave relief to the appellant with respect to penalty imposed by the Adjudicating authority. So for as adjustments of excess quantity of LG static converters is concerned Adjudicating authority has clearly brought out that the type of converter, where quantity was excess, had different marks & numbers than the type of converters where shortage was found. This aspect has been clearly brought out by the first appellate authority also. In the field of taking Cenvat Credit the onus is on the appellant to establish that excess quantity of the static converters was the same type where shortage was found. The stock taking was jointly done in the presence of Authorized representation & Sh. D.K. Dugar Prop. of the appellant on 23/3/2001, as is evident from the brief facts of demand cum- show cause notice dt 29/12/2008. Appellant now can not turn around and say that stock taking was defective or deficient. Therefore, in view of the above observations & settled proposition of law appeal filed by the appellant has no merit. - Decided against the appellant

Summary

Issues involved:
Recovery of incorrectly taken Cenvat Credit, time bar nature of demand, adjustment of excess quantity of LG static converters, stock taking during verification.

Recovery of incorrectly taken Cenvat Credit:
The appellant filed an appeal against the Order passed by the Commissioner (Appeals) Kolkata-I regarding the recovery of incorrectly taken Cenvat Credit due to shortages in the stock of static converters. The appellant argued that the demand was time-barred as penalty proceedings were dropped by the first appellate authority. The appellant contended that adjustment of excess quantity of static converters should have been allowed as they were imported and not manufactured in India. The Revenue argued that excess quantity of static converters was of different models than those with shortages, and adjustments could not be made. The Tribunal observed that the liability to account for goods is a continuing obligation, rejecting the time bar argument raised by the appellant.

Adjustment of excess quantity of LG static converters:
The issue revolved around the adjustment of excess quantity of LG static converters found during stock taking. The Tribunal, in a remand order, directed the original authority to re-examine the adjustment request based on relevant invoices and legal provisions. The Adjudicating authority allowed the appellant's contention on 15% value addition and reduced the duty and penalty amount. The first appellate authority provided further relief to the appellant regarding the penalty imposed. It was established that the type of converters with excess quantity differed from those with shortages, and the onus was on the appellant to prove the excess quantity was of the same type. The Tribunal emphasized the importance of accurate stock taking and rejected the appellant's claim of defective stock verification.

Stock taking during verification:
The Tribunal referred to a case law to highlight the significance of stock verification procedures. It was noted that objections regarding stock verification should be raised promptly during the process. The absence of signatures on the verification document was not considered a significant ground for rejection. The Tribunal emphasized that discrepancies in stock levels do not necessarily indicate intent, but the circumstances surrounding the stock variances should be considered. The Tribunal dismissed the appeal, citing the settled proposition of law and observations made regarding stock verification.

In conclusion, the Tribunal dismissed the appeal as it found no merit based on the issues of recovery of incorrectly taken Cenvat Credit, adjustment of excess quantity of LG static converters, and stock taking during verification. The judgment upheld the decisions of the lower authorities and emphasized the importance of accurate documentation and compliance with legal provisions in such matters.