2014 (2) TMI 718 - AT - Central Excise

Determination of excess stock - Confiscation of the excess stock with option to be redeemed on payment of redemption fine - Penalty under Rule 25 of Central Excise Rules on each of the appellant company as well as its Director/ Manager - Held that - excess stock in Shivangi Estates Ltd. s case is 25% as against the RG-1 Register balance 54.285 MT, the stock determined average basis was found to be 68.118 MT. Excess to the extent of 25%, in my prima facie view, is not possible on account of determination the weight on average basis. Therefore, in this case M/s. Shivangi Estates Ltd., prima facie that there was excess un-accounted stock and hence confiscation of the excess stock and imposition of penalty of this amount appears to be justified. In other three cases the alleged excess is less than 5% and in my prima facie view variation between the actual weight and the weight ascertained on average basis to this extent is possible. Therefore in these cases, the allegation of non-accounted of finished goods does not appear to be sustainable. Conditional stay granted.

Summary

Issues:

1. Determination of excess stock of MS Ingots in multiple factories based on weighment method.
2. Confiscation of excess stock with redemption fine and imposition of penalties.
3. Appeals against the orders-in-original and common order-in-appeal by Commissioner (Appeals).
4. Stay applications filed by the appellants regarding pre-deposit requirements.

Analysis:

1. The case involved the determination of excess stock of MS Ingots in various factories through a specific weighment method. The method included weighing a certain number of ingots to calculate the average weight and then multiplying it by the total number of ingots in stock. The appellant argued that this method was not entirely accurate and could lead to variations between the determined weight and the actual weight. Reference was made to previous tribunal judgments highlighting the importance of actual weighment for accurate stock assessment.

2. Following the stock assessments, the excess stock in each factory was seized, and penalties were imposed by the Assistant Commissioner under Rule 25 of Central Excise Rules. The appellants contested the confiscation and penalties, claiming that the alleged excess stock was not real due to the method of determination used. The Commissioner (Appeals) upheld the original orders without modifications, leading to the filing of appeals against these decisions.

3. During the hearing of the appeals, the appellant's counsel argued that the alleged excess stock was not accurately determined and that the penalties imposed were disproportionate to the duty involved. The Departmental Representative opposed the stay applications, supporting the findings of the Commissioner (Appeals) and asserting that the appellants had intentionally not accounted for the excess stock.

4. The judge analyzed each case individually. In the case of Shivangi Estates Ltd., where the excess stock was 25%, the judge found that the excess was not possible based on the average weight method used for determination. Hence, the confiscation and penalty imposition were deemed justified. However, in the other three cases where the excess was less than 5%, the judge opined that the variation between actual weight and average weight could account for the alleged excess. As a result, the allegation of non-accounted finished goods in these cases was considered unsustainable.

5. The judge granted a waiver from pre-deposit requirements for certain appellants while directing others to deposit specific amounts within stipulated periods. The decision was based on the prima facie assessment of the cases. The stay applications were disposed of accordingly, with specific instructions for compliance and reporting.

This detailed analysis of the judgment provides insights into the issues surrounding the determination of excess stock, confiscation, penalties, appeals, and the decisions made regarding pre-deposit requirements for the appellants.