2002 (12) TMI 186 - AT - Central Excise

Summary

Issues:
1. Challenge to Adjudication Order confirming Central Excise duty demand and penalty imposition.
2. Reversal of Modvat credit for Ferro Nickel.
3. Recovery of Modvat credit for Iron and Steel Scrap shortage.
4. Duty demand for Stainless Steel Billets removal.
5. Imposition of penalty under Section 11AC of the Central Excise Act.

Issue 1: Challenge to Adjudication Order
The Appellate Tribunal heard arguments regarding the challenge to the Adjudication Order confirming a Central Excise duty demand and penalty imposition. The Appellants did not contest the reversal of Modvat credit but sought no penalty due to being deceived by their supplier. The Tribunal upheld the disallowance and recovery of Modvat credit for Ferro Nickel.

Issue 2: Reversal of Modvat Credit for Ferro Nickel
Regarding the reversal of Modvat credit for Ferro Nickel, the Appellants did not dispute the disallowance and recovery of Modvat credit for the material found to be sub-standard. The Tribunal upheld the Adjudicating Authority's order in this regard.

Issue 3: Recovery of Modvat Credit for Iron and Steel Scrap Shortage
The dispute arose over the recovery of Modvat credit for Iron and Steel Scrap shortage. The Appellants claimed no shortage, stating that the officers misidentified the scrap stock. However, the Commissioner's findings, based on a Panchnama, concluded that the scrap was not available in the factory premises. Thus, the Tribunal upheld the recovery of the credit amount.

Issue 4: Duty Demand for Stainless Steel Billets Removal
The duty demand for Stainless Steel Billets removal was contested by the Appellants, arguing that the charge was based on misinterpretation of records. Despite their claims, the Tribunal found that the charge was substantiated by the Quality Control Department's report and the Appellants' own records. The demand for duty was upheld.

Issue 5: Imposition of Penalty under Section 11AC
Regarding the imposition of penalty under Section 11AC of the Central Excise Act, the Appellants argued against the excessive penalty due to the supplier's fraud. However, the Tribunal agreed that a penalty was warranted but deemed the original amount excessive. The Appellants were directed to pay a reduced penalty of Rs. 25 lakhs, considering the circumstances. The Appeal was partly allowed based on this decision.