Custom, Excise & Service Tax Tribunal
Ashirwad Steels & Alloys Pvt.Ltd vs Cce & St, Meerut on 9 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI COURT NO. IV SINGLE MEMBER BENCH Appeal No. E/2632/2012 (Arising out of OIA No.96-CE/MRT-I/2012 dt.17.4.2012 passed by the CCE(Appeals), Meerut-I) Date of Hearing: 19.12.2014 Date of Pronouncement: 09.01.2015 Ashirwad Steels & Alloys Pvt.Ltd. Appellants Vs. CCE & ST, Meerut Respondent
Appearance:
Shri Alok Arora, Advocate for the Appellants Shri A.K.Dhawan, DR for the Respondent CORAM:
Hon'ble Mr. Manmohan Singh, Member (Technical) FINAL ORDER No.50022/2015 Per MANMOHAN SINGH:
The appellants have come in appeal against the Order-in- Appeal No. 96-CE/MRT-I/2012 dt.17.4.2012 passed by the Commissioner(Appeals), Meerut-I where in the Commissioner (Appeals) partly allowed the appeal by reducing penalty from Rs.1,18,956/- to Rs.60,000/- and from Rs.16,698/- to Rs.5,000/- only. The Commissioner (Appeals) has held that there was no tangible evidence of clandestine removal of goods and accordingly the provisions of section 11AC were not applicable in the case of the appellants. Despite substantial benefit granted by the Commissioner (Appeals), they are in appeal before the Tribunal with the request to set aside confirmation of demand of duty/credit and dropping of imposition of penalties.
2. The brief facts of the case are that the appellants are engaged in the manufacture of M.S.Ingots, Bars falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. The main raw material for the manufacture of M.S.Bars was M.S.Ingots. The officers of the Central Preventive Customs & Central Excise, Meerut-I, on 20.07.2009, during the course of physical/verification of the stocks of the finished goods as well as raw material, lying in the factory premises of the appellants, detected a shortage of 58,900 MT of M.S.Bars, valued at Rs.14,43,639/- involving Central Excise duty of Rs.1,18,956/- and 9.650 MT of M.S.Ingots, valued at Rs.2,01,181/- involving Central Excise duty of Rs.16,698/- in comparison to the recorded balance of the said goods. Statement of Shri Israr Ahmed, Accounts Manager and Authorised Signatory of the appellants was recorded on the spot under section 14 of the Central Excise Act, 1944 and he could not put forth any plausible reason for the shortages, so detected, but agreed to the same and voluntarily debited the Central Excise duty, involved in the said shortages, vide debit entries nos.204 and 205 both dated 20.07.2009 in the Cenvat Account Register.
3. Central Excise duty amounting to Rs.1,18,956/- was leviable on the quantity of the finished goods found short. Credit amounting to Rs.16,698/- availed on inputs found short were demanded and since that is already debited by the appellant the same were appropriated along with imposition off penalty by the adjudicating authority which was later on modified by the Commissioner (Appeals).
4. Shri Alok Arora appeared on behalf of the appellant. He contended that the Commissioner (Appeals) in his order has held that there were no tangible evidence of clandestine removal of goods. He has restricted to impose penalty under section 11AC of Central Excise Act. He contended that the weight has been taken on average basis and percentage comes to 2.55% in the M.s.Ingots and in the bars 8.5% against the book balance 378.445 MT. Shortage of ingots was 9.65 MT. He also contended that in case of loose TMT and mixed lot of round, TMT and TMT & Tor, he claimed that it was done on eyes estimation basis. He referred to the judgment of Honble Allahabad High Court in the case of Minakshi Castings-2011 (274) ELT 180 (All.) and Single Member judgement of the Tribunal in the case of CCE, Meerut-I vs. Sri Jaibalaji Ispat Pvt.ltd.-2014 (310) ELT 556 (Tri.-Del.). He requested that there is no case of the department.
5. On the other hand, ld.DR submitted that the appellant have no proof that the panchnama was wrong. He says that their authorized signatory was present at the drawing of panchnama. No objection in respect of method of calculation has been raised. He referred to the judgement of Honble Allahabad High Court in the case of M/s.Bajrang Petro Chemicals (P) Ltd.-2014-TIOL-2254-HC-ALL-CX.
6. Heard both sides and gone through the records.
7. Simple issue involved in the appeal is regarding confirmation of demand of duty on the goods found short during verification in the factory and consequent imposition of penalties.
8. The main issued raised by the ld.Counsel is that though department on calculation and short found goods did not agree with para meters but his contest only relating to the quantity of TMT round, TMT and TMT & Tor were in the form of loose and mixed lot. No detail was given about calculation. He also pointed out that shortage was very less as there was percentage of 2.55% in the M.s.Ingots and in the bars 8.5% against the book balance 378.445 MT. Accordingly pleaded that since no details were available only final quantities have been given which is only eyes estimation and it should not be considered as proper conclusion of the shortage.
9. I find that detailed punchnama has been drawn during the visit to the factory on 20.7.2009 and detailed inspection has been conducted indicating standard weight of each bundle of 8 mm,10 mm, 12 mm, 16 mm, 20 mm and 25 mm of M.S.Bars. Simple physical weighments were done in the factory which were based on weight indicated by the representative of the appellant and accordingly that was made basis of calculation. This fact is not contested by the appellant. Only contest is weight of loose TMT and mixed lot of round, TMT and Tor and the bar. I find that their representative associated in weighment and consequent determination of shortage and those conclusions were duly accepted with signatures on verification report put by the authorised representative of the appellant. Raising those points at this level is not acceptable as fact of shortage is clearly manifested and acceptance of shortage by their representative and consequent deposit of duty on the shortage voluntarily clearly indicated that the proceedings have been conducted after taking them into confidence and were based on specified para-meters.
10. Regarding contention of shortage of percentage of 2.55% in the M.s.Ingots and in the bars 8.5% against the book balance 378.445 MT, I find that material involved for verification are M.S.Bars and M.S.Ingots which were steel items having identity, shape and specified weight. M.S.Ingots are used in the factory as inputs for manufacture of M.S.Bars of the process of rolling. Ingots are normally received from outside in the factory on which credit is taken by the appellant. For shortage lying in the stock has to be duly counted as items are not as such which will get mixed and remain identifiable. This cannot be stated that due to certain percentage of wastage, these items will not get consumed. I do not find any force in the contention of the appellant that merely because of percentage of total stock of 2.55% in the M.s.Ingots and in the bars 8.5% against the book balance 378.445 MT ipso-facto does not lead to conclusion that shortage should be ignored and no action for demand of duty and imposition of penalty should be taken.
11. I have perused the judgements quoted by the appellant. I find that facts in these judgements in the case of CCE, Meerut-I vs. Sri Jaibalaji Ispat Pvt.ltd.-2014 (310) ELT 556 (Tri.-Del.) and Continental Cement Factory vs. Union of India-2014 (309) ELT 411 (All) are different and not applicable to the facts of the present case. He also referred to the judgement of High Court of Allahabad regarding non imposition of penalty under section 11AC. This case is not relevant in the present proceedings as the Commissioner (Appeals) has already agreed for non imposition of penalty under section 11AC. Department is not in appeal before the Tribunal against reduction of penalties.
12. I have also gone through the judgement quoted by the Revenue in the case of M/s.Bajrang Petro Chemicals (P) Ltd.-2014-TIOL-2254-HC-ALL-CX wherein it has been held as under:
There was a huge shortage of finished goods for which no explanation was offered by the appellant at the time of stock checking. It means that the appellant had admitted the shortage and paid the duty accordingly. Thus, the appellant was unable to give any suitable explanation for the shortage of the finished goods. This is an admission by the appellant that the goods found short had been removed without payment of duty. The method for clandestine removal of the goods is not required to be explained. Since, it is case of the shortage of the finished goods for which the appellant has no explanation, so the provision of section 11AC for levy of the penalty and section 26 for levy of penalty on the authorised signatory would be attracted.
13. As per Honble High Courts finding above, it comes out that method for clandestine removal of the goods is not required to be explained. Since, it is case of the shortage of the finished goods for which the appellant has no explanation, so the provisions of section 11AC were invoked. Considering that the Commissioner (Appeals) has already allowed benefit which have not been challenged by the department despite finding of High Courts judgment, the Commissioner (Appeals)s order on this issue stands. Similarly as per discussion, no justification is found for the shortage and representative has duly admitted the shortage by signing stock report, duty voluntarily paid. There is no case for dropping of penalty as the demand relating to the duty has already been paid. Further imposition of penalty has been already dealt with very liberally by the Commissioner (Appeals) even though provision of section 11AC are applicable. I do not interfere in the reduction of the Commissioner (Appeals)s order.
14. In view of above, appeal is dismissed.
(Pronounced in the open court 09.01.2015)
(Manmohan Singh) Member(Technical)
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