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TMI Blog2013 (9) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... as regards the shortages - The supplier of the goods had admitted that there could be shortage and had compensated appellant on which the appellant had already reversed the cenvat credit attributable to such polyester chips. COMMISSIONER OF C. EX., CHENNAI Versus BHUWALKA STEEL INDUSTRIES LTD. [2009 (11) TMI 177 - CESTAT, CHENNAI [LB]] - There was no diversion of the inputs enroute and there was also no findings of clandestine diversion/sale of inputs - The losses which had been claimed by the appellant was claimed to be on weighment differences, which was not contested seriously by the Revenue, as both the lower authorities have only recorded summarily that the assessee had not putforth any evidence in the defence - appellant had made out a case for setting aside the demands raised and confirmed by the lower authorities to the tune - that portion of the order was set aside which upholds the confirmation of demand of for short receipt of inputs. Demand on Waste Yarn on the Ground of Undervaluation – Held that:- Accepting the responsible statement of the counsel that the total excess duty on such differences after considering the payment of central excise duty by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of central excise duty to the tune of Rs. 66,240/- not paid on 3000 kgs of POY manufactured and cleared illicitly, recovery of central excise duty amounting to Rs. 3,86,476/- short-paid on 389664 Kgs. of waste yarn cleared by showing less value in central excise invoices than actually recovered from the customers and for recovery of cenvat credit amounting to Rs. 4,78,800/- availed on 70 MT of polyester chips not received by them, interest was also sought to be recovered from the appellants and penalty was proposed on appellants and co-appellants. The said show cause notice was adjudicated vide O-I-O No. 57/Addl.Commr./VAPI/OA/2003 dated 15-3-2004 against which the appeal was filed by the appellants with the Commissioner (Appeals) who remanded back vide OIA No. MCRS/126, 127 128/VAPI/2005, dated 24-3-2005. Accordingly, the case was re-adjudicated by adjudicating authority in de novo proceedings and he confirmed the demand of the duty, recovery of cenvat credit on the materials received short and also ordered to recover central excise duty on the waste yarn cleared under various central excise invoices, holding that there was under invoicing, imposed penalties under Section 11AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from them as compensation and it is his submission that on the said amount of Rs. 10 lakhs, appellants have reversed the cenvat credit attributable to the accepted shortage of 28MT of polyester chips by Indorama Synthetics. It is his submission that admittedly there was weighment shortage of 42MT only and the said shortage is hardly 0.80% of the total purchases of chips made during the year which is approximately 5226.70 MT. It is his submission that the permissible tolerance limit under the Weights Measures Act and the Rules made thereunder was approximately 1%. It is his submission that the Larger Bench of the Tribunal in the case of Bhuwalka Steel Industries Ltd. - 2010 (249) E.L.T. 218 (Tri.-LB) and Ispat Industries Ltd. - 2012 (275) E.L.T. 235 (Tri.-Mumbai), it has been held that weighment differences within tolerance limits should be ignored. (c) As regards demand of duty of Rs. 3,86,476/- on waste yarn cleared by the appellant by undervaluing the excise invoice, it is his submission that the said demand has been confirmed on the basis of entries made in a private register and an approval letter dated 5-5-1997 by the purchase manager and the statements of company official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given any copies of the same and they are also unlikely to get the same inasmuch as the department have themselves asked the appellant to seek adjournment for providing the said documents. 4. Ld. DR on the other hand would submit that as regards differential duty on the shortage of the finished goods, the explanation given by the appellant is totally unacceptable as it is the finished goods on which shortage was noticed and accepted. It is his submission that such shortage even if it has to be considered as 0.060%, there are still finished goods and it is the liability appellant to account for the same properly in his books of account. As regards the demand of the shortage of the inputs, he would submit that the appellants themselves have accepted the shortage by lodging a claim with the supplier of the goods. He would accept the fact that the appellants had paid/reversed an amount of cenvat credit taken on 28MT of shortage which has been accepted by the supplier but would submit that the shortage of 42MT having been admitted, appellants could not be allowed to take the cenvat credit on such quantity received short. It is his submission that as regards the demand of duty on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured product, there cannot be any shortage, unless until the appellant is able to prove that such shortage has arisen due to storing/evaporation losses during the storage. In the case in hand we are discussing about the finished goods which is polyester filament yarn and the assessee has not been able to prove from records that the said shortage was due to losses or pilferage in his premises. It is also to be noted that the assessee has not claimed any wastage during the earlier period but on being detected, claimed that the said wastage is 0.060% of the finished goods manufactured in the year 1998-1999. In our opinion, this claim of the assessee does not have any firm legal backing, is without any substance, as the appellant himself should have reconciled the stocks earlier and could have informed the department as regards the shortages. Having not done so, it is too late for the appellant to stake the claim of loss, being than 1% of the total finished goods manufactured. Accordingly, we find that appellant has no case as regards confirmation of the demand of Rs. 66,240/- on the shortage of finished goods POY. We uphold the impugned order to that extent and reject the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se countable number of pieces or packages and whether all such packages and pieces have been received and accounted for at the receiving end. (iv) Whether the difference in weight in any particular case is on account of weighment on different scales at the despatch and receiving ends and whether the same is within the tolerance limits with reference to the Standards of Weights and Measures Act, 1976. (v) Whether the recipient assessee has claimed compensation for the shortage of goods either from the supplier or from the transporter or the insurer of the cargo. 13. All these factors listed above and any other relevant factor has to be kept in view in deciding any particular case as to whether the entire consignment has been received at the end of the recipient assessee without any diversion. Tolerances in respect of hygroscopic, volatile and such other cargo has also to be allowed as per industry norms excluding, however, unreasonable and exorbitant claims. Similarly, minor variations arising due to weighment by different machines will also have to be ignored if such variations are within tolerance limits. In our view, each case has to be decided according to merit and no har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis thereof were not admissible to the parties. In the present case, the validity of invoices was never called in question and, therefore, the above High Court decisions are not applicable. There can be not doubt, the burden of proof regarding admissibility of CENVAT credit is on the claimant as laid down under the relevant rule and as held by the High Court in the case of Greaves Cotton Ltd. In the present case, this burden was successfully discharged by the respondent by producing valid invoices and certificates from the Legal Metrology Department and independent Chartered Engineer. They could establish that the variations in weight of HR coil between the invoices and the HR Coil Receipt Register were within the tolerance limits prescribed for the weighbridges under the SWM (General) Rules made under the SWM Act and, therefore, the entire quantity of material covered by the invoices was received in the factory and used in the manufacture of the final product. Again, no doubt, the rules governing availment of MODVAT/CENVAT credit are mandatory as held by the High Court in Nicholas Piramal case. At the same time, it cannot be ignored that Parliament recognized the possibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was a letter which was issued by the appellant s purchaser manager, for collection or charging an amount of Rs. 10.50 per kg. in excess of the invoice raised, we find that the adjudicating authority as well as the first appellate authority has not adduced any evidence that the appellant had in fact received the said amount of Rs. 10.50 per kg. from the various purchasers. The amount which has been indicated in the private register as received in excess also clearly indicates that the appellant has not under invoiced to the tune of Rs. 10.5 per kg. as has been indicated in the letter. We also find a strong force in the contentions raised by the ld. counsel that despite there being name and address of the consignees on the invoices, no statements have been recorded by the lower authorities from these consignees, to conclusively prove that the appellant had received excess amount from them. 10. Be that as it may, since there is existence of the private notebook, which indicates an amount received in excess of the amount which has been billed in the corresponding invoices, we find that such an amount received by the appellant in excess of the amount billed needs to be confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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