1994 (5) TMI 72 - AT - Central Excise

Summary

Issues:
1. Excess stock of steel ingots found during physical verification.
2. Denial of MODVAT credit on steel flats and cuttings.
3. Confiscation and redemption fine imposed by the Additional Collector.

Analysis:
1. The appeal was filed against an Order-in-Original regarding the discovery of excess stock of steel ingots during a physical verification, leading to Central Excise duty implications. The excess stock was found to be 10.094 M.T., valued at Rs. 77,723.80. The Director of the company admitted the excess stock, which was seized for further action under Central Excise law. The Department also alleged that MODVAT credit was availed without proper declaration, leading to a show cause notice and subsequent adjudication by the Additional Collector.

2. The appellant argued that the Department's conclusion of a shortage based on average weight was incorrect, as actual weighment should have been conducted. The appellant contended that the difference in weight was within a reasonable tolerance limit and that MODVAT credit should not be denied as the steel flats and cuttings were used in the manufacturing process. The Department, however, maintained its position that the denial of MODVAT credit was justified due to the lack of declaration of inputs under the relevant rules.

3. The Tribunal, after considering both parties' arguments, upheld the decision regarding the excess stock of steel ingots but disagreed with the denial of MODVAT credit. The Tribunal noted that the Director of the company had agreed to the average weight basis due to the impracticality of actual weighment. Regarding MODVAT credit, the Tribunal emphasized that technical lapses should not result in the denial of credit, especially when the inputs were used in the final product. Consequently, the redemption fine and penalty imposed by the Additional Collector were reduced to Rs. 5,000 and Rs. 2,000, respectively. The appeal was disposed of with these modifications.