Customs, Excise and Gold Tribunal - Calcutta
Swastic Industries vs Commissioner Of Central Excise, Raipur on 13 February, 2002
Equivalent citations: 2002(81)ECC538, 2002ECR436(TRI.KOLKATA), 2002(142)ELT710(TRI-KOLKATA)
ORDER Archana Wadhwa, Member (J)
1. As per the facts on record, the appellants' factory who are engaged in the manufacture of HDPE Pipes, HDPE Woven Sacks, was visited by the Central Excise officers on 11-1-96. The physical stock verification vis-a-vis, the RG-I records showed shortage of various types of pipes/HDPE fittings waste and woven sacks. The Officers also found that 53,387.50 kg. of regenerated/recycled HDPE granules, were found in excess in the factory and the recorded balance of 58,300 kgs. of fresh HDPE granules on which the appellants had availed the Modvat credit was short. Accordingly, the excess found granules were seized by the Officers. The statement of the appellants' Authorised Representative, Shri V.K. Maheshwari was recorded where in he admitted the shortages and excesses.
2. Based upon the above facts, proceedings were initiated against the appellants vide two show cause notices. Both the notices were adjudicated upon by the impugned order of the Commissioner, Raipur vide which he confirmed the demand of duty of Rs. 1,79,549/- in respect of various finished excisable goods found short at the time of visit of the officers. He also confiscated the excess found recycled HDPE granules with an option to the appellants to redeem the same on payment of redemption fine of Rs. 80,000/-. Modvat credit to the extent of Rs. 5,39,275/- availed in respect of 58.30 MT of fresh HDPE granules but not available in the appellants' factory was confirmed under the provisions of Rule 57-I. In addition, a penalty of Rs. 50,000/- was imposed under Rule 173Q.
3. Shri B.N. Chattopadhyay, Id. Consultant appearing for the appellants, submits that they are manufacturing pipes for the Department of Telecommunication and Woven Sacks for various fertilizers' unit which are Public Sector Undertaking. As such he submits that it is not possible for them to clear their product without payment of duty inasmuch as their customers are Government owned factory. He submits that the alleged shortages are the result of physical stock taking done by the Officers on eye estimation basis and not on actual weighment of the pipes. The appellants have also contended in their memo of appeal that in January, 1996 it was very cold and the verification was not done properly by the Officers in the chilly hour of January when the mercury went down so low as to make it impossible to work. As for the Department's allegations that the fresh HDPE granules have been substituted with re-cycled HDPE granules after availing the Modvat credit he submits that there is no evidence to that effect produced by the Revenue. Before using the fresh granules, they mixed the same with carbon black and thereafter, they are packed in bags for use in the manufacture of pipes. He submits that the bags found in the appellants' premises are of HDPE granules mixed with carbon black. This fact is also evident from the fact that there is not much weight difference between the alleged shortage and alleged excess of granules.
4. I have also heard Shri A.K. Mondal, Id. JDR for the Revenue who reiterates the reasoning adopted by the Commissioner (Appeals).
5. After considering the submissions made from both the sides and after going through the impugned order, I find that duty of Rs. 1,79,549/- has been confirmed in respect of various final excisable goods manufactured by the appellants, which were found short than the recorded balance at the time of visit of the Officers. Shri V.K. Maheshwari, Authorised Representative of the appellants' Company in his statement recorded on the day of visit of the Officers, admitted the shortages. He also deposed to the effect that he is the person who is looking after the excise affairs of the Company and he is empowered to maintain excise record in the factory, to prepare and to sign the excise invoices. He also submitted that he was fully satisfied with the procedure of verification done by the Officers on 11-1-96. I also note that the said statement of Maheshwari has not been retracted by the deponent. The appellants' plea that the stock verification was not done properly, was raised for the first time before the adjudicating authority at the time of filing reply to the show cause notice. If the appellants were not satisfied with the process of stock taking, they could have brought this fact immediately to the notice of the Officers after the visit. There is no such representation on record. As such their plea that some of the goods including waste and sacks were lying in their factory and was not taken note of by the visiting officer has to be rejected as after-thought inasmuch as if the appellants would have brought this fact to the notice of the Higher Officers immediately after the visit, the Department was in a position to verify the said claim of the appellants by visiting their factory again. Similarly, the appellants' contention that in January, 1996, it was very cold and it was impossible for the officers to conduct the verification in a proper manner, if accepted, would result in acceptance of all search and seizure cases, made out in the months of winter. There is no evidence on record to substantiate the above contention of the appellants. If the final product has been found short than the recorded balance, it is for the assessee to explain by reasoning the shortages of the same. Onus definitely gets shifted to the appellants. Such shortage cannot be brushed aside simply on the ground that the Department has failed to prove them by production of positive evidence of removal without duty, which is impracticable. Accordingly, I confirm the demand of duty of Rs. 1,79,549/-
6. As regards the denial of Modvat credit of Rs. 5,39,275/-, it is alleged that the credit taken on 58.30 MT of fresh HDPE granules, is not admissible to the appellants inasmuch as during the time of visit of the Officers, there were no fresh granules available in the factory and instead 53.387 MT of re-cycled HDPE granules were found, which were not entered in records. From this, the adjudicating authority has concluded that the quantity of prime HDPE granules was substituted with the quantity of re-cycled granules, after availing the Modvat credit on the fresh granules. The above findings are based upon the fact that whereas fresh granules were packed in bags of Reliance Industries, M.P. Laghu Udyog Nigam, IPCL etc., regenerated/recycled granules were found in bags without containing any name of suppliers. Bags were also looking old and stitched jute twin/tied with jute twin. However, I find that the appellants have given an explanation for the above. When supplies for fresh granules are issued and mixed with carbon black before being using for manufacture of pipes. It was thus mixed with HDPE granules which were found in the bags by the Officers. The above contention of the appellants has not been rebutted by the Revenue. It is also seen that four samples of re-cycled/re-generated HDPE granules was taken by the Central Excise Officers but there is no test report of the same showing as to whether they were the prime quality of HDPE granules or the regenerated granules. In the absence of any test report, I intend to extend the benefit of doubt to the appellants. As such, denial of Modvat credit of Rs. 5,39,275/- and the confiscation of the granules with an option to the appellants to redeem the same on payment of redemption fine of Rs. 80,000/- is set aside.
7. In view of the appeal being partly allowed, I reduce the quantum of personal penalty from Rs. 50,000/- to Rs. 25,000/-. Appeal is disposed of in the above terms.