1997 (9) TMI 361 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on 'Abrasive Grains' used in manufacturing Refractory Fired Bricks.
2. Imposition of penalty for discrepancies in stock balance.
3. Time-barred demand of duty.
4. Merits of the case regarding the discrepancies in records and failure to properly account for inputs.

Analysis:
1. The appellants claimed Modvat credit on 'Abrasive Grains' used in manufacturing Refractory Fired Bricks. The denial of credit and imposition of penalty were based on discrepancies in stock balances between the Balance Sheet and RG-23A Part-I register. The appellants maintained proper accounts and filed requisite returns, but discrepancies were noted in the closing balance of 'Abrasive Grains'.

2. A show cause notice was issued raising a demand of duty due to shortages in inputs compared to recorded balances. The appellants made adjustments in the RG-23A Part-I register after the notice, but another notice was issued in 1993 alleging further shortages and demanding duty. The argument on limitation was raised by the appellants, citing the unadjudicated previous notice and lack of wilful misstatement in the new notice.

3. The argument on limitation was countered by the respondent, stating that Rule 57-I(2) had no prescribed time limit for issuing notices in cases where inputs were not fully accounted for. The respondent emphasized the appellants' duty to properly account for inputs and the Department's initial burden of showing shortages, which the appellants failed to explain satisfactorily.

4. The judgment addressed the plea on limitation, ruling that Rule 57-I(2) did not have a time limit for issuing notices, and the demand was not barred by limitation. On the merits, the discrepancies in records were noted, and the appellants failed to provide evidence to refute the shortages or account for the inputs properly. The appellants' argument on the nature of goods and care taken was deemed insufficient to justify the discrepancies.

5. The judgment concluded by directing the authorities to review any adjustments made by the appellants in the RG-23A Part-I register and reevaluate the demand of duty accordingly. The appeal was disposed of based on the findings regarding the discrepancies in records, the duty demand, and the lack of evidence provided by the appellants to support their case on merits.