2004 (3) TMI 267 - AT - Central Excise

Cenvat/Modvat - Declaration - discrepancy in stock records - Clandestine removal of finished goods -clearance of goods without proper entries - Penalties - HELD THAT - We find that the plea of the assessees before the Commissioner was that they had only casting machinery installed in their factory for the manufacture of ingots and that they did not possess re-rolling or forging facilities for manufacture of billets which are products of re-rolling or forging. This has not been rebutted by the Revenue in the appeal before the Tribunal. Further even after physical verification of stock carried out by the Central Excise authorities the products had been authenticated as steel ingots under CET sub-heading 7206.90 while billets fall for classification under CET sub-heading 7207.90. As the Revenue has not either raised the ground or established that billets are products of casting or that the assessee had installed re-rolling or forging machinery for manufacture of billets the finding of the Commissioner on this aspect cannot be faulted and we accordingly uphold the same and reject Appeal. In the absence of any charge or finding of use of any other source of power allegation of suppression of production cannot be sustained. We also note that even applying the formula of 90% yield the ingots generated will only be 2655.800 out of 2950.893 MTs of unaccounted scrap while the Revenue has alleged that 4979.31 MTs of ingots have been clandestinely produced. Similarly the total plant returns for the disputed period is 6142.730 MTS and not 4612.148 MTs as held by the authorities below. Central Excise authorities have ignored the figures of certain plant returns such as short ingots yard cleaning etc. which do not figure in the production register as they emerge during further processing of the goods and therefore figure only in the plant return register and the plant returns have been confined only to such plant returns which emerge at the production stage and figuring in the production register only which is not correct. In the light of the above we hold that the department has not discharged the burden of proving clandestine removal of finished products and therefore we set aside the demand confirmed on the ground of suppressed production and clandestine clearance. Certain minor areas remain for decision such as the difference between physical stock and book stock resulting in a demand of Rs. 1, 87, 197/-; clearance of billets in the guise of MS scrap resulting in a demand of Rs. 2, 75, 631/- clearance effected on 3-3-1993 without making debit entries in the RG 23A Part II registers resulting in duty confirmation of Rs. 1, 57, 600/-; and clearance to Bhuvalka Industries Bangalore on 26-2-1993 on which although findings have been recorded all the submissions made by the appellants have not been taken into consideration. In the interests of justice we remand the above 4 issues for fresh decision by the jurisdictional Commissioner for passing of fresh orders after hearing the appellants and taking into account all the arguments raised by them. The penalty imposed on the appellants is set aside in view of our findings that the charge of suppressed production and clandestine clearance of ingots is not established. The appeals are disposed of in the above terms.

Summary

Issues Involved:
The issues involved in the judgment are irregular availment of Modvat credit, suppression of production, clandestine clearance of finished goods, discrepancy in stock records, clearance of goods without proper entries, and imposition of penalties.

Irregular Availment of Modvat Credit:
The case revolved around the denial of credit on duty paid scrap availed on MS billets not declared in the 57G declaration. The Tribunal upheld the Commissioner's decision based on the distinction between steel ingots and billets, as well as the absence of evidence showing the manufacturing of billets by the assessee.

Suppression of Production and Clandestine Clearance:
The Revenue alleged suppression of production and clandestine removal of finished goods by the appellants. However, the Tribunal found discrepancies in the calculation of clandestinely removed quantity, citing errors in accounting for plant returns and production processes. The demand based on suppressed production and clearance was set aside.

Discrepancies in Stock Records and Other Issues:
Certain minor issues such as differences in physical and book stock, clearance of billets as scrap, clearance without proper entries, and transactions with another company were remanded for fresh decision by the Commissioner. The penalty imposed on the appellants was set aside due to the lack of evidence supporting suppressed production and clandestine clearance.

The judgment by the Appellate Tribunal CESTAT, Chennai addressed issues related to irregular Modvat credit availment, suppression of production, clandestine clearance, discrepancies in stock records, and penalties imposed, providing detailed analysis and findings for each issue.