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TMI Blog2009 (5) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... Held that- Hence, though there is no allegation of removal of these goods clandestinely or otherwise, since there is a shortage of finished goods, the appellants are liable to pay excise duty on the said shortages, which is noticed by the authorities during the stock verification. In view of this, we confirm the demand of duty of Rs.1,18,828/- on the shortages noticed by the lower authorities and uphold the impugned order to that extent.7. Another issue in this appeal is demand of Rs.10,253/- on the resins which was found short. The appellants are not challenging this part the confirmation of the demand of the duty, hence, the impugned order to this extent it upholds this confirmation of demand, is upheld. As regards the penalty, we find that the penalty has been imposed under Section 11AC of Central Excise Act, 1944. Since we have held that the demand of the duty on the waste wood is unsustainable, there cannot be any penalty on such an amount of duty. We find that the penalty imposed on these two employees is unwarranted. The impugned order to the extent upholds the penalties imposed on these two employees, is also not sustainable and is liable to be set aside and we do so. - E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage of veneer cleared concluding that the waste will get classified under Chapter Sub-heading No. 4404.90, he also confirmed the duty amount of Rs.1,18,828/- on the shortage of finished goods found in the factory premises, imposed an equivalent amount of penalty under the provisions of Section 11AC on the appellant. He also imposed penalty of Rs.10,000/- each on the two employees of the company under the provision of Rule 209A read with Rule 26 of Central Excise Rules, 2001-2002. Aggrieved by such an order, the appellants preferred an appeal before the Commissioner (A). The learned Commissioner (Appeals) in the impugned order, after granting a personal hearing and considering the written and oral submissions made by them, upheld the entire Order-in-Original. Aggrieved by such an order, the appellants are before us. 3. The learned advocate appearing on behalf of all the three appellants submitted the following. (i) Waste wood is not excisable. (a) It is his submission that the waste wood that is generated during the course of manufacture of plywood is sold by the appellants as waste wood at a standard rate of Rs.1.50 per kg. It was also his submission that the lower authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, there can be no demand of duty on such scrap. (iii) The next issue is regarding demand of duty on shortages is not sustainable. It is his submission that the lower authorities have confirmed the demand of Rs.1,18,828/- on shortages allegedly found during the course of verification is not sustainable, as the shortage was on account of non-posting of entries in their books and not due to any unaccounted removals. It is his submission that in any case shortages were noticed on 13-9-2001 and the show cause notice has been issued on 31-5-2004, hence, demand raised is therefore barred by limitation. For this proposition, he would rely upon the Final Order No. 732-733/2005 dated 11-5-2005 passed by this Bench in the case of Bripranil Synthetics Indus. (P) Ltd. which has been upheld by the Hon'ble High Court of Karnataka. In view of these submissions, it is his submission that the appeal may be allowed. 4. The learned departmental representative appearing on behalf of the revenue would submit that there is a Chapter Heading 4404.90 which would clearly indicate that it would cover under its scope all the items which are in respect of veneer sheets and sheets for plywood. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16% It can be noticed from the above reproduced chapter heading that these chapter headings-specifically cover veneer sheets and sheets for plywood and does not talk anything about waste or clearing. The efforts of the revenue to put the product under chapter heading 4404 is totally misconceived, as the entire chapter heading No. 4404 is for the veneer sheets and sheets for plywoods. In this case before us, it is seen that the items cleared by the appellants as veneer sheets and plywood sheets, they are discharging the duty liability. The duty liability which is sought to be visited on the appellant on the waste and trimmings, would not be correct, as they are not veneer sheets or plywood sheets. We are fortified in our view by the decision of the coordinate bench of the Tribunal in the case of Jenny Plywoods Inds. (supra) wherein an identical issue arose. The Tribunal held as under: "3. We find that both the issues are now decided by the earlier decisions of the Tribunal. It has been held in the case of CCE, Shillong v. Nagaland Wood Products (Order No. A-259/Cal/96, dated 25-4-1996) that the peeling rollers are properly classifiable under Heading 44.03. This decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995) 3 SCC 23]. Therefore both on authority and on principle, for being exigible to excise duty, excisable goods must satisfy the test of being produced or manufactured in India. The argument to the contrary is reject. 14. Does the item in question satisfy the tests of being "manufactured in India" and "marketability"? While discussing the earlier issue, we have already emphasized the requirement of goods being manufactured in India being satisfied before excise duty can be levied on goods. This requirement is a sine qua non for levy of excise duty. Excise duty in fact is an incidence of manufacture". 5.3 We also find that an identical view was taken by the Apex Court in the case of Elphinstone Metal Rolling Mills (supra). In view of this, since it is undisputed that the clearances which is made by the appellants are of waste, are nothing but cutting and trimmings, we find that the said waste cannot get covered under the sub heading no. 4404 of the Schedule to Central Excise Tariff, 1985 and hence, the demand on this issue is liable to be set aside and we do so. The impugned order to the extent it upholds the demand on such waste wood, etc., is set aside. 6. As regards th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of justice, a penalty of Rs.10,000/- is imposed on the appellant under the provisions of Rule 25 of Central Excise Rules, 2002. 8.2 We find that penalties on two employees are imposed under the provisions of Section 209A and Rule 26 of Central Excise Rules, 2002. We find that the role attributed to them cannot call for imposition of penalty. It seems that they were not aware that goods are liable for confiscation. In the absence of any such findings by the Adjudicating Authority or by the learned Commissioner (Appeals), we find that the penalty imposed on these two employees is unwarranted. The impugned order to the extent upholds the penalties imposed on these two employees, is also not sustainable and is liable to be set aside and we do so. 9. In short, the demand of the duty and imposition of penalty on the waste wood is set aside. The demand of duty on the quantity of final goods found short is upheld and penalty of Rs.10,000/- is imposed for such violation and the demand of duty for Rs.10,253/- for the shortage of raw materials / input found is upheld. The penalties imposed on the two employees are also set aside. The appeals are disposed off as in the indicated hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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