2015 (2) TMI 223 - AT - Central Excise

Clandestine removal of goods - Lack of evidence - goods found short during verification in the factory and consequent imposition of penalties - Held that - detailed punchnama has been drawn during the visit to the factory on 20.7.2009 and detailed inspection has been conducted indicating standard weight of each bundle of 8 mm,10 mm, 12 mm, 16 mm, 20 mm and 25 mm of M.S.Bars. Simple physical weighments were done in the factory which were based on weight indicated by the representative of the appellant and accordingly that was made basis of calculation. This fact is not contested by the appellant. Only contest is weight of loose TMT and mixed lot of round, TMT and Tor and the bar. I find that their representative associated in weighment and consequent determination of shortage and those conclusions were duly accepted with signatures on verification report put by the authorised representative of the appellant. Raising those points at this level is not acceptable as fact of shortage is clearly manifested and acceptance of shortage by their representative and consequent deposit of duty on the shortage voluntarily clearly indicated that the proceedings have been conducted after taking them into confidence and were based on specified para-meters. Material involved for verification are M.S.Bars and M.S.Ingots which were steel items having identity, shape and specified weight. M.S.Ingots are used in the factory as inputs for manufacture of M.S.Bars of the process of rolling. Ingots are normally received from outside in the factory on which credit is taken by the appellant. For shortage lying in the stock has to be duly counted as items are not as such which will get mixed and remain identifiable. This cannot be stated that due to certain percentage of wastage, these items will not get consumed. I do not find any force in the contention of the appellant that merely because of percentage of total stock of 2.55% in the M.s.Ingots and in the bars 8.5% against the book balance 378.445 MT ipso-facto does not lead to conclusion that shortage should be ignored and no action for demand of duty and imposition of penalty should be taken. No justification is found for the shortage and representative has duly admitted the shortage by signing stock report, duty voluntarily paid. There is no case for dropping of penalty as the demand relating to the duty has already been paid. Further imposition of penalty has been already dealt with very liberally by the Commissioner (Appeals) even though provision of section 11AC are applicable. I do not interfere in the reduction of the Commissioner (Appeals)s order - Decided against assessee.

Summary

Issues Involved:
Confirmation of demand of duty on goods found short during verification in the factory and imposition of penalties.

Analysis:

1. The appellants appealed against the Order-in-Appeal passed by the Commissioner (Appeals), where the penalty was reduced but demand of duty was confirmed. The appellants contested the confirmation of demand and dropping of penalties.

2. The case involved a shortage of M.S. Bars and M.S. Ingots during a physical verification by officers. The appellants' representative admitted the shortages and voluntarily debited Central Excise duty for the shortages.

3. The main contention raised by the appellants was the lack of tangible evidence of clandestine removal of goods and the calculation method for shortages. The appellant referred to relevant judgments but failed to provide detailed calculations for the shortages.

4. The Department argued that the appellant's authorized signatory was present during the verification, and no objections were raised regarding the calculation method. They cited a judgment to support their position.

5. The Tribunal found that a detailed panchnama was drawn during the visit, and the shortages were based on physical weighments done in the factory with the appellant's representative present. The shortages were accepted and duty was voluntarily paid.

6. The Tribunal rejected the appellant's argument regarding the percentage of shortages, stating that the shortages were clearly manifested and accepted by the appellant's representative. The Tribunal emphasized that the shortages were based on specified parameters.

7. The Tribunal reviewed relevant judgments cited by both parties and found them not applicable to the present case. The Commissioner (Appeals) had already agreed to not impose penalties under section 11AC, and the Department did not challenge this decision.

8. Referring to a judgment cited by the Revenue, the Tribunal highlighted that the appellant's inability to explain the shortages led to the levy of penalties. The Tribunal upheld the Commissioner (Appeals)'s decision on the issue of penalties.

9. Ultimately, the Tribunal dismissed the appeal, stating that the demand of duty had already been paid, and the penalties had been reduced by the Commissioner (Appeals) in a liberal manner. The Tribunal did not interfere with the Commissioner (Appeals)'s order.

In conclusion, the Tribunal upheld the confirmation of demand for duty on the shortages found during verification and the imposition of penalties. The Tribunal emphasized the importance of proper documentation and acceptance of shortages by the appellant's representative in such cases.