2000 (8) TMI 914 - AT - Central Excise

Summary

Issues:
Denial of Modvat Credit for shortages found during Annual Stock-taking.

Analysis:
The Commissioner of Central Excise confirmed the demand of duty and penalty by denying Modvat Credit for shortages of inputs found during the Annual Stock-taking in the factory. The appellants argued that the shortages were self-detected during stock-taking, and subsequent developments, including a previous Order denying Modvat Credit for a significant quantity of "Alumina," should neutralize the shortages. The Commissioner's Order reducing the quantum of "Alumina" in the RG-23A Part-I register by 6232.156 M.T. was crucial in this context. The Tribunal agreed that this reduction should be considered while assessing shortages, and the appellants should not be penalized for the same quantity twice. The Tribunal found no justification for confirming the demand of duties for alleged shortages of "Alumina."

The Tribunal emphasized that the reduced quantum of "Alumina" as per the Commissioner's earlier Order should be the basis for calculating shortages, not the initial quantity in the RG-23A Part-I register. By comparing actual inputs received with the reduced quantum, no shortages were found. The Tribunal also noted that the period involved in the previous Order and the current appeals overlapped. Consequently, they concluded that there was no justification for confirming duty demands for alleged shortages of "Alumina." A small duty amount for Petroleum Coke found short was confirmed, as it was not pressed further by the appellants due to its insignificance.

Regarding the personal penalty, since the appeals were allowed based on the above analysis, the Tribunal set aside the penalties imposed on the appellants. Therefore, both appeals were disposed of in favor of the appellants, emphasizing the importance of considering the reduced quantum of inputs as per the Commissioner's earlier Order while assessing shortages during stock-taking.