1999 (2) TMI 196 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand for duty on shortages in final products.
2. Imposition of penalty under Rule 173Q for availing Modvat credit on capital goods without permission.

Confirmation of Demand for Duty on Shortages:
The case involved discrepancies noted by officers in the stock of finished products and raw materials during a factory visit, leading to a show-cause notice for confiscation of excess goods and duty recovery for shortages. The appeal contested the demand of Rs. 3,17,200/- based on shortages in final products, arguing for set-off against excesses. However, since the goods were not of the same category, the Commissioner upheld the demand, as the appellant failed to provide further arguments.

Imposition of Penalty under Rule 173Q for Modvat Credit:
Regarding Modvat credit lapses, a demand of Rs. 2,79,25,905/- was raised for errors in availing credit. The Commissioner examined the issue, upholding the credit taken on original invoices due to finalization by the proper officer. However, the demand was dropped for using the wrong copy of the invoice, citing limitation grounds. The penalty imposed under Rule 173Q for availing credit on capital goods without permission was also challenged. The Commissioner upheld the penalty, but the appellant cited a Supreme Court judgment stating that if the demand does not sustain due to limitation, the penalty cannot be imposed. Consequently, the penalty was set aside, resulting in partial success of the appeal.

In conclusion, the appeal succeeded partially, with the confirmation of demand for duty on shortages upheld, while the penalty under Rule 173Q for Modvat credit lapses was set aside. The stay application was also disposed of as part of the judgment.