9911796707
TMI Blog2006 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ips/inserts, tipped tools, Tungsten tools, dies, Tungsten Carbide nozzles etc. classifiable under Chapter 82 & 34 of Central Excise Tariff Act, 1985. The officers of the Directorate General of Central Excise Intelligence conducted certain investigations in the appellants' unit and found out excess and shortage in the stock of finished goods vis-a-vis the appellants' Computers System. A show cause notice dated 25.3.2004 demanding duty amount of Rs. 56,09,485/ -for the years 1999 to 2002 was issued demanding duty on the shortages only without setting off the shortages against excesses. The Commissioner confirmed the demand of Rs. 23,06,508/- on the shortages under proviso to sub-section (1) of Section11A of Central Excise Act, 1944 & She impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow access to stock and further invoicing. The up-gradations are done by the appellants under two system codes, viz, system code 701 and system code 702. Up under system code 701 is done when the physical quantity in excess when compared to the computer whereas up-gradation under system code 702 is done when the physical quantity of item is found to he lesser as compared to stock of the said item in the computer. (ii) When the DGCEI found out excess and shortage, the appellants explained their system of accounting and the circumstances under which entries for adjusting the excesses and shortages requested for considering both the same are done and further submitted that the summary of shortage and excess for the years 1999 to 2002 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt material code. Once the above position is accepted, any netting of excess against shortage has to be done between two different material codes as requested by the appellants and not within same material code as done by department. Even with in the same material code, the stand alone excess quantity or the difference of excess over shortage where excess is more needs to be set off to arrive at the net difference. Reliance is placed on Tribunal decision the case of Cherian P. Varghese vs. CCE, 1992 (59 ELT 537. (vi) The Commissioner in Para 17 of the impugned order has held that there is no clandestine removal of goods yet duty has been demanded. This is not sustainable. Reliance is placed on the Tribunal decision in the case Sapthagiri C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .05.2003 in their Cenvat account without prejudice to the legal rights of the appellants. The show cause notice has been issued on 25.3.2004 leading to the impugned Order-in-Original dated 27.08.2004 confirming duty demand of Rs. 23,06,508/ -.The appellants have paid the duty much before the date of issue of show cause notice. It is settled law that no penalty and interest is payable, if duty is paid before issue of Show Cause Notice. Reliance is placed on the following cases:- (a) Larger Bench decision in the case of CCL Vs. Machino Montell. 20114 (62) RLT 709 (b) CCL Vs. Shree Krishna Pipe Industries, 2004(61) RLT 17(Kar.)=2004 (165) ELT 508 (Kar.) (c) Rashtriya Ispat Nigam Ltd. Vs. CCL, 2003 (54) RLT 317 (CEGAT Ban.)=2003 (161) ELT 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay total duty of Rs. 56,09,485/-. 7. It is seen that the statutory records of production, RG-1 is maintained manually wherein through IDN (Internal Delivery Note) they accounted production and through delivery challans, clearances were accounted. It is not the case of the Revenue that there is a discrepancy between the entries in the statutory record of production, mainly RG1 and the physical stock available on a particular day. It is admitted that a large number of components are being manufactured by the appellants and they have a special system of accounting called the SAP system. When the appellants find discrepancies in the physical stock and what is shown in the SAP system, we have to infer that errors have kept in the accounting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points out only that their own system of accounting has a margin of error. According to the appellants this come to around 2%. To put it in lay man's language, when the production of an item is 100, there is a possibility of the same being shown as either 102 or 98. This is what all we can infer from the Show Cause Notice issued to the appellants. The Adjudicating authority herself has observed that the transaction of the assessee is heavy and voluminous and almost one lakh pieces of items are manufactured and cleared from their factory, on an average annually. She has given a finding that there .seem to be.a certain degree of negligence in maintaining the stock account as far as .the Central Excise law is concerned. But there is no finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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