2016 (8) TMI 121 - AT - Central Excise

Excess of physical stock noticed as compared to that recorded in the RG-1 register. - Appellant claimed that physical weighment not done and weight recorded on estimation basis, deducted certain percentage for normal losses and then recorded production. Respondent contended huge difference found in actual stock and records which can be seen by a simple eye estimation. Held that - huge difference found can not be on account of processing loss. Also it is not logical that the appellants would weigh the raw material while charging the furnace but no weigh the finished goods which come out from the furnace. It is apparent that the contention of the appellants has no merit. - Appeal dismissed. - Decided against the assessee.

Summary

Issues:
Duty demand on excess physical stock compared to RG-1 register entries.

Analysis:
The case involved a dispute where the appellant, a steel manufacturer, was issued a show-cause notice for duty demand on the excess physical stock observed compared to the entries in the RG-1 register. The appellant argued that they recorded the weight of MS Ingots on an estimation basis, deducting 10% for various losses. They claimed that the excess stock noticed was minimal, relying on precedents like the Bhillai Conductors case. On the other hand, the respondent argued that the significant difference in stock cannot be explained by the appellant's reasons. They cited the Jindal Drugs and Nissan Copper cases to support confiscation even for non-accountal of goods. The tribunal noted that the difference between recorded and actual stock was substantial and not justifiable by processing losses. The tribunal found the appellant's contentions lacking merit, emphasizing that the decision in the Surya Ferrous Alloys case cited by the appellant was not relevant. The tribunal distinguished between earlier and current excise rules cited by both parties, ultimately dismissing the appeal.

The tribunal analyzed various legal precedents cited by both parties to determine the applicability of confiscation rules for unaccounted goods. They referred to the decision in the Nissan Copper case, where it was held that non-accountal of finished goods can lead to confiscation, even without mens rea. Additionally, the tribunal referenced the ruling in the Dayal Alloy & Steel Castings case, highlighting that non-accounting of goods in statutory records can attract confiscation under the relevant excise rules. These references were crucial in establishing the legal basis for upholding the duty demand and dismissing the appeal.

Overall, the tribunal carefully considered the arguments presented by both parties regarding the excess physical stock and the applicability of confiscation rules for unaccounted goods. They scrutinized the legal precedents cited, focusing on the specifics of the case and the relevant excise rules. The tribunal ultimately concluded that the substantial difference in stock quantities could not be justified by the appellant's explanations, leading to the dismissal of the appeal and upholding of the duty demand on the excess stock.