Custom, Excise & Service Tax Tribunal
M/S. R.S.Industries vs Commissioner Of Central Excise, ... on 13 September, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
EXCISE APPEAL NO.E/A/939/2011
(ARISING OUT OF ORDER-IN-APPEAL NO.100/KOL-II/2011 DATED 19.08.2011 PASSED BY COMMISSIONER OF CENTRAL EXCISE (APPEALS), KOLKATA)
FOR APPROVAL AND SIGNATURE OF
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
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 His Lordship wishes to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/S. R.S.INDUSTRIES
APPELLANT (S)
VERSUS
COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II
...RESPONDENT (S)
APPEARANCE:
SHRI N.K.CHOWDHURY,ADVOCATE FOR THE APPELLANT(S);
SHRI S.P.PAL, A.R.(APPRAISER) FOR THE REVENUE.
CORAM:
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER Date of Hearing & Decision:13.09.2013 ORDER NO.FO/A-71057/2013 The present Appeal is filed against Order-in-Appeal No.100/KOL-II/2011 dated 19.08.2011 passed by Commissioner of Central Excise (Appeals), Kolkata.
2. Briefly stated the facts of the case are that the Appellant are engaged in the manufacture of excisable goods namely, MS Flats, Rounds, Squares etc. falling under Chapter 72 of the Central Excise Tariff Act, 1985. Their factory was visited by the Central Excise Officers on 10.08.2006. During the course of Joint Verification of the physical stock of the finished goods, the Officers noticed a shortage of 48.280 MT in comparison to the entry of stock in Daily Stock Account i.e.RG-I Register. The Appellant had accepted the said shortage in the stock and agreed to discharge applicable Central Excise duty on the same and tendered the Cheque No.469532 dated 10.08.2006 for Rs.1,38,676/-. Consequently, a show cause notice was issued to them on 07.05.2007 for appropriation of the duty paid and imposition of penalty under Section 11AC of the Central Excise Act, 1944. On adjudication, the ld. Assistant Commissioner of Central Excise confirmed and appropriated the duty and also imposed penalty of equivalent amount under Section 11AC of the CEA,1944. Aggrieved by the said Order, the Appellant had filed an appeal before the ld. Commissioner (Appeals), who had rejected their appeal. Hence, the present Appeal.
3. Ld. Advocate for the Appellant, at the outset, has submitted that in the present Appeal, they dispute only the issue of imposition of penalty under Section 11AC of the CEA,44 by the Adjudicating Authority and confirmed by the ld. Commissioner (Appeals). He has made a categorical submission that the Appellant are not before this Tribunal challenging the Orders of the lower authorities with regard to confirmation and appropriation of duty of Rs.1,38,676/- paid by them on 10.08.2006 relating to shortage of finished goods of 48.280 MT. The ld. Advocate explaining the purported shortage of 48.280 MT in the physical stock of the finished goods in comparison to their RG-I Register, submitted that during the course of physical stock verification, while furnishing the weight of MS Flats, Rounds, Squares etc. lying in bundles, they had informed the average weight of each bundle as around 70 Kgs. Consequently, the weight of the finished goods in bundles had been arrived at, after comparing the physical stock with the stock of finished goods, and as recorded in the RG-I Register, there was a difference (shortage) of around 48.280 MT. To avoid further litigation, they had paid the duty involved on the said goods found short. In the statement of Shri Bishnu Poddar, Factory Manager of the Appellant Firm, though the shortage was accepted and duty was agreed to be paid, but nowhere it had been stated that the said quantity was removed from the factory clandestinely without payment of duty. The ld. Advocate further submitted that in absence of evidence of clandestine removal of goods from the factory, penalty under Section 11AC of CEA,1944 is unwarranted and unjustified. In support, he has referred to the judgment of this Tribunal in the case of Commissioner of Central Excise, Chandigarh vs. Shree Ganesh Steel Rolling Mills Pvt. Ltd., 2009(241)ELT 47(Tri.-Del.) and Galaxy Textiles vs. CCE, Vapi, 2011(263)ELT 604(Tri.Ahmd.)
4. Ld. AR for the Revenue reiterated the findings of the ld. Commissioner (Appeals). The ld. AR further submitted that since the Appellant could not account for the shortage of goods noticed during the course of visit of the Officers on 10.08.2006 and paid the duty on such shortages, therefore, the shortages of goods were on account of clearance from the factory clandestinely without payment of duty and hence, the penalty was rightly imposed and confirmed under Section 11AC of the CEA, 44. In support, he has referred to the judgment of this Tribunal in the case of CCE, Allahabad vs. Bharat Rolling Mills, 2012(284)ELT 539(Tri.-Del.)and CCE,Delhi-III vs. Mico Glass Industries Pvt. Ltd., 2010(254)ELT 231(P&H).
5. Heard both sides and carefully considered the records. I find that during the course of visit of the Officers on 10.08.2006, shortage of around 48.280 MT in the finished stock was found against the recorded stock of 39,025 MT in the RG-I Register. I have also seen Annexure:C to the show cause notice, wherein the result of Joint Stock Verification had been recorded. The total quantity of stock mentioned in the said Stock Verification Report, had been arrived at by multiplying the number of bundles with the factor 70 assuming that each bundle weighed 70Kgs. I find force in the contention of the ld. Advocate for the Appellant that each bundle of MS Flats, Rounds, Squares etc. cannot, in any case, uniformly weigh 70 Kgs., but it would be slightly more or less. At the time of clearance of the goods from the factory, the same were weighed at the Weigh-Bridge and in the respective excise invoices, the correct weight had been accordingly mentioned, on which duty was being paid by applying the transaction value per MT. I find from the statement of the employees, Shri Bhishnu Poddar recorded on 10.08.2006 that no admission of removal of goods clandestinely without payment of duty had been mentioned. The relevant question No.(8) and its answer is reproduced as below:-
Q.8. In the Joint Stock Verification of finished goods in your factory premises conducted by the visiting Central Excise Officers under our guidance, a shortage of stock of finished products to the extent of 48.280 MT has been ascertained and agreed by you in the Joint Stock Verification Report and Stock Verification Working Steel. The rate/assessable value of such goods as per Invoice No.51 dtd. 08.08.07 is Rs.17,600/- per MT. So, the Central Excise Duty on the quantity of shortage is Rs.1,35,957/- and Edn.Cess is Rs.2,719/- totaling Rs.1,38,676/-. Are you ready to pay this amount right now?
Ans. Yes, the shortage of 48.280 MT has been ascertained. We are ready to pay the applicable Central Excise Duty and E.Cess right now.
6. It is clear from the said statement that shortage had been admitted and the applicable duty was paid. No question was raised in ascertaining the reason of such shortage. Accordingly, no explanation was also furnished by the said employee. In these circumstances, it is difficult to accept the contention of the ld. AR for the Revenue that the shortage quantity was removed from the factory clandestinely without payment of duty, when no further investigation had been carried out by the Department. I find force in the contention of the ld. Advocate that such shortages could be on account of various factors, including the practice of determining the weight on applying average weight of each bundle. In absence of cogent evidences or admission of removal of goods clandestinely from the factory without payment of duty, in my opinion, the ingredients of Section 11AC of the Central Excise Act. 1944, are not attracted. I find from the impugned notice that penalty has not been proposed under other provisions of Central Excise Act or the Rules made thereunder, except under Section 11AC of the CEA,1944. In view of the above discussions, as penalty is not imposable under Section 11AC of CEA,1944 and in absence of proposal of penalty under any other penal provisions, therefore, no penalty could be imposed on the Appellant for the said shortage. In the result, the impugned Order of the ld. Commissioner (Appeals) is set aside to the extent of confirmation of penalty imposed on the Appellant. The Appeal is thus partly allowed to the above extent.
(Operative part of the Order pronounced in the court on 13.09.13) Sd/-
(D.M.MISRA)
JUDICIAL MEMBER DUTTA/
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E/A/939/2011
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