2003 (9) TMI 127 - AT - Central Excise

Summary

Issues:
- Shortage of raw material
- Suppression of production

Shortage of Raw Material:
The appellants, engaged in Gutka manufacturing, were found with a shortage of raw materials during a visit by Revenue authorities. The Central Excise duty was demanded based on the statement of the Company Director regarding the amount of Gutka that could be manufactured from the missing raw materials. The adjudicating authority confirmed the demand and imposed penalties. The appellants contended that the shortage was only in specific raw materials and not in other inputs like lamination. They relied on previous decisions to argue that a shortage of some raw materials does not prove clandestine manufacture. The Tribunal found that the demand was not sustainable as there was no evidence to show that the missing inputs were used in the final product without duty payment.

Suppression of Production:
Regarding the suppression of production, the appellants argued that the Revenue did not account for manufacturing losses like moisture loss and waste during the cutting of Supari. They explained the process of cutting and heating Supari, which results in weight loss. The Revenue calculated the final product quantity based on the Director's statement, disregarding the manufacturing losses. The Tribunal found that the Revenue failed to rebut the appellant's contention about the weight loss in Supari. As the factual aspect raised by the appellants was not contradicted, the demand for suppression of production was deemed unsustainable. The impugned order was set aside, and the appeals were allowed.