Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S.Indian Additives Ltd on 17 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/1097 & 1098/2005
[Arising out of Order-in-Appeal No.90 & 91/2005 (M-I) dated 30.09.2005 passed by the Commissioner of Central Excise (Appeals), Chennai]
For approval and signature:
Honble Shri P. KARTHIKEYAN
Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether the Member wishes to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental Authorities?
Commissioner of Central Excise, Chennai
Appellant
Versus
M/s.Indian Additives Ltd.
Respondents
Appearance:
Shri J.P. Gregory, JCDR for the Appellant Shri V.S. Manoj, Adv.
for the Respondents CORAM:
Mr. P. KARTHIKEYAN, Member (Technical) Date of hearing : 17.1.2008 Date of decision : 17.1.2008 FINAL ORDER No.____________ This is an appeal filed by the Revenue. The respondents M/s. Indian Additives Ltd. manufacture its final products using imported and indigenous inputs, most of which are chemicals. Examination of the records of the assessee indicated that during the period August, 1995 to June, 2001, the assessee had short received inputs in the form of liquid bulk cargo but had availed credit of duty paid on the quantity invoiced in cases where shortage was upto 0.5% of the invoiced quantity. After due process of law, the original authority demanded an amount of Rs.4,59,124/- relatable to the short received inputs as credit wrongly availed and imposed penalties totalling above Rs.2.78 lakhs. The appeals filed by the respondents against the two Orders-in-Original were disposed by the impugned common Order-in-Appeal No.90&91/2005 dated 30.9.2005 affirming the demand and reducing the total penalty to Rs.73,750/-. In arriving at the above decision, the Commissioner (Appeals) had followed various judicial authorities. It is seen from the impugned order that the appellants had argued that there were also excess receipts compared to the quantity invoiced in several instances.
2. The learned JCDR submits that the respondents had taken credit in excess of the duty paid on the quantity of inputs received in the factory knowing fully well that the same was against law. The Commissioner (Appeals) had erred in reducing the penalty imposed by the original authority. He reiterated the prayer in the appeal that the penalties imposed by the original authorities may be restored.
3. The learned counsel for the respondents submits that as is obvious from the Show Cause Notice that the respondents had taken only proportionate credit when the shortages were in excess of 0.5% of the invoiced quantity. There have also been several instances where the respondents had received quantities in excess of corresponding invoiced quantity. He submits that fluctuations upto 0.5% have to be condoned in terms of the Weights and Measures Act. There was no deliberate attempt to avail undue credit by them. The respondents did not receive reimbursement from the supplier for the short received quantity. Credit was taken of the duty paid on the inputs. He relied on the following decisions of the Tribunal in support of his claim that there was no wrong availment of credit. As they had paid the credit relatable to the short receipts of inputs, in the absence of any intention to defraud the Revenue, the penalty imposed deserved to be vacated. In any case, the penalties in terms of the impugned order did not warrant enhancement.
4. I have carefully considered the case records and the submissions by both sides. The case records do not indicate as to what is the input in respect of which demand has been made. Either party also does not throw any light on this aspect. The records show that the input was received in bulk liquid form and that certain consignments had suffered loss in transit. The appellants availed credit appropriate to the actual quantity received whenever loss was in excess of 0.5% of the invoiced quantity. They ignored smaller losses upto 0.5% and availed credit in respect of the entire quantity invoiced. There were several instances of excess receipt of inputs as noted in the impugned order. The various judicial authorities cited condoned transit loss upto various percentages from 0.5% to above 2%.
5. Following case laws cited by the respondents support their claim that the demand was uncalled for:
(i) In Gharda Chemicals Ltd. Vs CCE, Mumbai reported in 2004 (176) E.L.T. 296 (Tri.-Mumbai), the Tribunal decided that the shortage in inputs received in factory was merely 0.5% and the same was attributable to difference in calibration of weigh-bridges. Modvat credit was admissible in respect of the whole amount. The ratio of the above case would support the claim of the respondents that no duty was demandable from them for shortages observed in some consignments upto 0.5%. As rightly argued by the counsel, the difference in weight would have been due to the different scales used at the consignors end and at the factory of the respondents. The fact that the respondents is a PSU and that there were cases of excess receipts as well establish their bona fide conduct.
(ii) In Estee Auto Pressing Pvt. Ltd. Vs CCE, Chennai III reported in 2007 (209) E.L.T. 211 (Tri.-Chennai), the Tribunal condoned shortages in receipt of inputs upto 2% considering the same to be owing to weighment in different weigh-bridges. In that case, the demand of the Revenue for short receipts upto 2% was vacated by the Tribunal.
(iii) In P.K.P.N. Spinning Mills Ltd. Vs CCE, Coimbatore reported in 1997 (89) E.L.T. 588 (Tribunal), the Tribunal decided that the credit was not deniable for the shortage in weight of the input received owing to loss due to moisture in transit.
(iv) Similarly in Tata Motors Ltd. Vs CCE reported in 2005 (179) E.L.T. 413, the Tribunal ordered that the difference between the quantity consigned and quantity received upto 2.42% had to be overlooked and the entire credit allowed. In that case, the inputs involved was Furnace Oil and LDO transported in sealed railway rakes.
6. The assessee is a Central Government Undertaking. The assessee paid the credit relatable to the shortages though the same was apparently not payable by them. The respondents availed credit of duty paid and obviously bona fidely. In the facts of the case imposition of any penalty on the respondents does not seem justified. In the circumstances, I am convinced that the prayer of the Revenue for enhancing the penalties sustained in the impugned order is devoid of any merit. The appeal filed by the revenue is dismissed.
(Dictated and pronounced in open court) (P. KARTHIKEYAN) MEMBER (T) ksr 17-01-2008 ??
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