2013 (11) TMI 982 - AT - Central Excise

Confirmation of Cenvat credit Assessee contended that there was no real shortage as the weight of the Cenvat Credit availed HR Sheets in stock had been by estimation basis and not by actual weighment Held that - There was a weighing machine in the factory in which one or two HR Sheets could be weighed at a time, the weight could also be determined on the basis that average weight of HR Sheet of 1.25met x 2.5 met dimension is 73.5 Kg. - besides this, at the time of stock taking Sh. Puri, was present and at that time he had accepted the method of determination of weight not only by signing the stock verification report but also stating in his statement recorded under section 14 of the Central Excise Act, 1944 he accepts the shortage and agrees to pay the duty on the HR Sheets found short - Once Sh. Puri has taken this position at the time of stock taking and has given a statement under section 14 of the Central Excise Act, at the time of adjudicating and appeal proceedings he cannot reverse his earlier stand in his statement under section 14 accepting the shortage as the same would be act as a estoppel - The appellant s plea that the method of weighment was not correct is, therefore, no acceptable - just because for setting aside the penalty, the Commissioner (Appeals) has given findings that on the basis of mere shortage clandestine removal cannot be inferred, the confirmation of duty demand cannot be set aside Decided against Assessee.

Summary

Issues:
1. Shortage of HR Sheets leading to Cenvat Credit demand
2. Dispute over the method of determining the weight of HR Sheets
3. Appeal against the confirmation of duty demand

Analysis:
1. The case involved a situation where the appellant, a manufacturer of motor vehicle parts, faced a shortage of HR Sheets in their factory during a visit by Central Excise Officers. The shortage amounted to 39.195 MT, resulting in a Cenvat Credit demand of Rs. 1,60,508. Initially, the Director of the company admitted the shortage, but later retracted the statement during the proceedings. The Assistant Commissioner confirmed the duty demand along with penalties, which was challenged in an appeal to the Commissioner (Appeals).

2. The main contention revolved around the method used to determine the weight of HR Sheets. The appellant argued that the weight was estimated, not determined by actual weighment. However, the Commissioner (Appeals) upheld the duty demand, stating that the weight could have been accurately determined using the average weight of HR Sheets based on their dimensions. The appellant's plea regarding the incorrect method of weighment was dismissed, emphasizing that the Director's initial acceptance of the shortage and the method of determination created a binding effect.

3. The Tribunal analyzed the submissions from both sides and found no merit in the appellant's appeal. Despite the Commissioner (Appeals) setting aside the penalty on the grounds of insufficient evidence for clandestine removal, the confirmation of duty demand was upheld. The Tribunal emphasized the Director's initial acceptance of the shortage and the method of determination, stating that his subsequent retraction could not be accepted due to the principle of estoppel. Consequently, the appeal was dismissed, affirming the duty demand and rejecting the appellant's arguments regarding the weighment method.