2017 (11) TMI 428 - AT - Central Excise

Shortage of finished goods and material - irregular availment of CENVAT credit - Held that - appellant has failed to produce the closing stock for physical verification. I am not convinced by the explanation given by the appellant for short recovery of scrap. Therefore, I do not find any infirmity in the impugned order upholding the Order-in-Original by the Commissioner (Appeals) - demands under the provisions of CCR 2004 read with proviso to Section 11A(1) of the CEA along with demand of interest and also imposed equal penalty u/s 11AC of the CEA 1944 read with Rule 25 of the CER upheld. Penalty on accounts officer of assessee - Held that - the Revenue has not been able to bring any evidence on record that he knew or he had reason to believe that the excisable goods in question were liable for confiscation under Central Excise Rules which is the only factor relevant for imposition of penalty under Rule 26 of the CER, 2002 - penalty on the Accounts Officer set aside. Appeal allowed in part.

Summary

Issues:
Appeal against Commissioner (Appeals) order - Irregular cenvat credit, central excise duty demands, penalty imposition, closing stock verification, service tax credit, place of removal, penalty on Accounts Officer.

Analysis:
The appeals arose from a common impugned order by the Commissioner (Appeals) dismissing the appeal by M/s. Arihant Ship Breakers and reducing the penalty on Shri Rajesh Mehta, Accounts Officer. The issues included irregular cenvat credit, central excise duty demands, and penalty imposition. The original authority confirmed demands under Cenvat Credit Rules 2004 and imposed penalties under the Central Excise Act. The Commissioner (Appeals) upheld the order but reduced the penalty on the Accounts Officer. The appellant challenged the order, arguing the impugned order did not consider the case's peculiar facts and documents on record.

Regarding the irregularities found during the audit, the appellant contended that the impugned order did not consider the burning loss and corrosion resulting in weight loss of scrap. The appellant also argued that the penalty for availing irregular cenvat credit on hydraulic mobile crane was unjust as there was no intention to evade duty. Additionally, the utilization of education cess for excise duty payment was deemed a procedural error, questioning the penalty imposed. The appellant claimed the consignment agent's warehouse as the place of removal for excise rules compliance.

The respondent defended the impugned order, stating the Commissioner (Appeals) considered all grounds and evidence. The respondent highlighted discrepancies in the appellant's stock records and lack of documentation proving the exact quantity of short recovery of scrap. The eligibility for service tax credit on outward freight was also disputed, with the Commissioner (Appeals) finding the appellant's contention untenable. The Commissioner (Appeals) upheld the original order after analyzing all evidence.

The Tribunal, after hearing both parties and reviewing the evidence, found no infirmity in the impugned order upholding the demands and penalties. However, the penalty on the Accounts Officer was dropped due to lack of evidence proving his involvement in excisable goods liable for confiscation. The Tribunal upheld the order dismissing the appeal by the appellant. The judgment was pronounced on 23/10/2017.