2018 (6) TMI 240 - AT - Central Excise

Clandestine removal - excesses and shortage of stock - Fabrics - Demand of duty - penalty u/s 11AC of CEA - Held that - The physical inspection of goods were carried out in presence of director on the day of visit on 23.02.2004, the daily stock was written up to 21.02.2004, whereas the raw material account was written up to 16.02.2004. The director admitted the above facts in his statement. It is also a fact that the appellant allotted marked same lot numbers again to the fabrics received from processing. There has been deliberate violation of central excise law by the appellant unit. No proper explanation has been given for above discrepancies and shortages of goods. In such circumstances, there is no reason to interfere with the impugned order - appeal dismissed - decided against appellant.

Summary

Issues: Alleged shortage of stock, confiscation of excess stock, penalty imposition under Central Excise Act, 1944, and Rule 26 of CER, 2002.

The case involved appeals filed against an OIA dated 10.01.2006 by Commissioner (Appeals), Mumbai Zone-I by M/s. Bhalotia Bleaching & Dyg. P. Ltd. and its director. Officers conducted physical verification of stock at the Appellant's premises and found discrepancies in stock levels. The appellants were accused of not allotting fresh lot numbers and using existing or previously allotted lot numbers for grey fabrics. The authorities issued a show cause notice demanding duty for shortages and proposed confiscation of excess stock, along with penalties under various provisions. The demand was confirmed by the adjudicating authority and Commissioner (Appeals), leading to the present appeals where no one appeared for the Appellants.

The Appellants argued that certain pieces were in the process and should not have been seized, while others were wrongly confiscated. They claimed that some finished goods were awaiting packing after inspection and should not be considered manufactured goods. The Appellants also contended that the shortages were accounted for with lot numbers and identification marks, denying any evidence of clandestine removal. However, the Tribunal found deliberate violations of central excise law by the Appellant unit, noting discrepancies in stock records and the reuse of lot numbers. The director's statements and admission of facts during inspection further implicated the unit in the violations. Consequently, the Tribunal upheld the impugned order, dismissing both appeals and holding the director responsible for the violations.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) regarding the duty demand, confiscation of excess stock, and penalty imposition under the Central Excise Act, 1944, and Rule 26 of CER, 2002. The judgment highlighted the deliberate violations and lack of proper explanation for discrepancies in stock levels, ultimately holding the director accountable for the unit's non-compliance with central excise laws.