2004 (2) TMI 179 - AT - Central Excise

Summary

Issues:
Validity of the order-in-appeal reversing duty demand and penalty based on shortage of raw material and finished goods.

Analysis:
1. The Revenue challenged the order-in-appeal that reversed duty demand and penalty imposed due to a shortage of raw material and finished goods found during a surprise visit. The Commissioner (Appeals) reversed the original order confirming duty and penalty, citing attestation of panchnama by the Manager of the respondents without objection. The Revenue argued that the Commissioner (Appeals) wrongly relied on a previous case's law. The Counsel argued that no actual weighment was conducted to determine the shortage, referencing a different case law.

2. The Counsel contended that no actual weighment was done to establish the shortage of raw material and finished goods. The Manager did not admit the shortage, and panch-witnesses confirmed no actual weighment took place. The Counsel referred to a specific case law to support their argument.

3. Upon review, it was found that during the surprise visit, a shortage of raw material and finished goods was recorded by Central Excise officers. The Manager attested to the shortage without objection during the panchnama signing. The subsequent denial of weighment by the respondents lacked legal value as the correctness of the panchnama was not challenged in their response to the show cause notice. The duty was debited on the spot, indicating the correctness of the shortage.

4. There was no evidence that the respondents disputed the panchnama immediately after the visit. The duty debit was not alleged to be made under protest in their response. The Commissioner (Appeals) failed to consider these facts and wrongly applied previous case law. The law cited by the Revenue was found applicable to the case.

5. The case law referred to by the Counsel was deemed irrelevant to the present case as it involved a different scenario. The Commissioner (Appeals) failed to apply the law correctly, leading to the order being set aside.

6. The Commissioner (Appeals) order was overturned, restoring the original order by the adjudicating authority. The Revenue's appeal was accepted.

7. The Counsel's argument against the penalty was rejected as the law permits imposing a penalty equal to the amount of duty in cases of duty evasion. The penalty imposed was deemed reasonable and not excessive.

8. Consequently, the Commissioner (Appeals) order was set aside, and the original order imposing duty demand and penalty was reinstated, with the Revenue's appeal being successful.