2017 (6) TMI 856 - AT - Central Excise

100% EOU - shortage of stock - polished granite slabs - the appellants being 100% EOU having goods stored in bonded premises for the intended purpose and having undertaken to export the goods produced within the 100% EOU, have not accounted for the said goods, duly. The shortage of polished granite slabs is due to unaccounted disposal of the same, as no explanation was offered by the appellant for such shortage - Held that - the appellant being EOU are having bonded premises in which they undertake approved operations and the products arising out of such operation are to be exported. In case the same are to be cleared on Domestic Tariff Area (DTA), required procedure is to be followed. Admittedly, no such procedure has been followed by the appellant and the shortage of produced goods has not been explained. We note that the appellants are put to duty liability in terms of Section 3 (1) proviso. The said proviso stipulates the method of arriving at the quantum of duty of excise which shall be levied and collected at any excisable goods which are produced or manufactured by 100% EOU. Regarding the correctness of stock taking, the stock taking has been conducted in the presence of independent witnesses and the authorized representative of the appellant. The authorized representative in his statement dated 06/10/2000 clearly stated that physical stock verification was conducted in his presence and he was satisfied in the manner of stock taking. The shortage noticed in the present case is more than 600 sq. mtr. of polished granite slab. Appeal dismissed - decided against appellant.

Summary

Issues involved:
1. Duty liability of a 100% Export Oriented Unit (EOU) for unaccounted shortage of polished granite slabs.
2. Exceeding remand directions by lower authorities.
3. Question of 'manufacture' in terms of a Supreme Court decision.
4. Correctness of stock taking process.

Analysis:
1. The case involved a 100% EOU facing duty liability due to an unaccounted shortage of polished granite slabs found during a stock verification. The Original Authority confirmed the duty demand, which was upheld by the Commissioner (Appeals), leading to the appellant's appeal against this decision.

2. The appellant argued that the lower authorities exceeded the remand directions by passing orders on different grounds and confirming the duty liability. The Tribunal had directed a re-examination of the issue of 'manufacture' based on a Supreme Court decision, which the lower authorities considered applicable to the case. The shortage of slabs was attributed to unaccounted disposal by the appellant.

3. The appellant contended that their manufacturing process did not amount to 'manufacture' as per the Supreme Court decision cited. However, the Tribunal noted that being a 100% EOU, the appellant was required to account for all goods in bonded premises for export, and the shortage of slabs indicated unaccounted clearance. The Tribunal referred to a High Court decision dealing with a similar situation to support this finding.

4. The correctness of the stock taking process was also challenged by the appellant, alleging improper measurement by the officers. However, the Tribunal observed that the stock taking was conducted in the presence of independent witnesses and the appellant's representative, who expressed satisfaction with the process. The significant shortage of over 600 sq. mtrs. of slabs further supported the findings.

In conclusion, the Tribunal found no merit in the appellant's appeal and dismissed it, emphasizing the appellant's duty liability as a 100% EOU and the unexplained shortage of polished granite slabs.