2016 (12) TMI 921 - AT - Central Excise

Imposition of penalty - shortage of stock - 95MTs of MS scrap found short on physical verification of their factory stock - clandestine removal - Held that - reliance placed on the decision of the case of Goyal Ispat v. CESTAT, Chennai 2015 (3) TMI 866 - MADRAS HIGH COURT , where it was held that the order of the Tribunal is not on the basis of visual inspection, but based on mahazar records recording the shortage of goods, which has been done in the presence of the independent witnesses and such shortage was supported by the unretracted statement of Mr. Balaji, Manager of the assessee company. In this view of the matter, the non-recording of the correct quantity of goods in the statutory record, viz., RG.1 register maintained by the assessee establishes the case for demand of duty, more so in a case of statement accepting Central Excise violation - appeal dismissed - decided against appellant.

Summary

Issues:
1. Upholding the order of the lower authority regarding duty liability on shortage of stock.
2. Contention over the method of estimating the shortage.
3. Interpretation of legal principles regarding quantification in cases of stock shortage.
4. Comparison of decisions from different Tribunals and High Courts to determine the validity of the case.

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai dealt with the appeal against the order of the Commissioner of Central Excise (Appeals) upholding the appropriation of payment made by the appellant on the shortage of 95MTs of MS scrap found during a physical verification of their factory stock. The appellant argued that the shortage was estimated through 'eye estimate' and not scientifically verified, contending that the production process involved pouring scrap and scull into the furnace with quantity entered on an estimate basis. The appellant relied on previous Tribunal decisions emphasizing the necessity of exact quantification in cases of duty demand due to stock shortage.

The opposing argument presented by the Authorized Representative referred to a High Court decision which highlighted the importance of maintaining correct quantity records in statutory registers, supporting duty demand in cases of Central Excise violation. The judgment cited the presence of independent witnesses during the recording of shortage and unretracted statements of the company's manager as evidence. Additionally, the judgment referenced another High Court decision to strengthen the case for upholding the duty demand.

Ultimately, the Tribunal dismissed the appeals based on the decision of the High Court, emphasizing the significance of maintaining accurate records and the unretracted statement of the company's manager as crucial factors in establishing duty demand. The judgment highlighted the importance of legal principles and previous decisions in determining the outcome of the case, ultimately ruling in favor of upholding the duty liability on the shortage of stock.