Custom, Excise & Service Tax Tribunal
M/S Gaurang Alloys & Iron Ltd vs Commr. Of Central Excise & S.Tax, Ranchi on 16 September, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, EAST REGIONAL BENCH : KOLKATA
Ex. Appeal No.68/09
Arising out of Order-in-Appeal No.61/RAN/2009 dated 16.12.08 passed by Commr. of Central Excise & Service Tax (Appeals), Ranchi.
SHRI S. S. KANG, HON'BLE VICE PRESIDENT
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? :
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M/s Gaurang Alloys & Iron Ltd.
...APPELLANT(S)
VERSUS
Commr. of Central Excise & S.Tax, Ranchi
RESPONDENT (S)
APPEARANCE Shri B. N. Chattopadhyay, Consultant for the Appellant (s) Shri A. K. Sharma, JDR for the Department CORAM:
SHRI S. S. KANG, HON'BLE VICE PRESIDENT Date of hearing & decision : 16.09.2009 ORDER NO......................................................................................... Per Shri S. S. Kang :
Heard both sides. The appellants filed this appeal against the impugned order whereby a demand of Rs.2,25,235.00 was confirmed in respect of the finished goods found short and penalties were imposed under Section 11AC of the Central Excise Act, 1944, under Rules 25 & 27 of the Central Excise Rules, 2002 and also under Rule 15 of the Cenvat Credit Rules, 2004.
2. Brief facts of the case are that on 22nd July, 2006, the Revenue Officials visited the factory premises of the appellants and on verification, it was found that there was shortage of 49.290 MT of the finished goods when compared with the statutory report. There is also shortage of packing materials i.e. Jute Bags. The finished goods are Silico Manganese which are cleared in the Jute Bags containing 50 kgs of Silico Manganese. The verification was conducted in the presence of authorized signatory of the appellants. Shri Upendra Pratap Singh, Production Manager admitted the shortage. The adjudicating authority confirmed the demand and imposed penalties. The Commissioner (Appeals) dismissed the appeal filed by the appellants.
3. The contention of the appellants is that no physical weighment was done. It is only on eye estimation, the Revenue officials came to the conclusion that there was shortage of finished goods. The contention is that there was some finished goods approximately 16 MT in loose condition and no actual weighment was done in respect of the goods found in loose condition. The contention is that in the circumstances, the demand on the ground of shortage is not sustainable. The appellants also submitted that it is not a case for imposition of penalty under Section 11AC of the Central Excise Act. Section 11AC provides that in case the duty has not been paid or levied or has been short-levied or short-paid by reason of fraud, any willful mis-statement of suppression of facts or contravention of any of the provision of the Act with intent to evade payment of duty, the contention is that in the present case, there is no evidence on record that the goods found short were clandestinely removed from the factory. It is only an accounting error. Hence, the appellants are not liable for imposition of penalties. The appellants also relied on the following decisions :
(i) Commr. of Central Excise, Kanpur Vs. Mineral Oil Corpn.-2009 (239) ELT 171 (Tri.-Del.) ;
(ii) Commr. of Cus. & C. Ex., Kanpur Vs. Vacmet Packagings (India) Pvt. Ltd. - 2009 (239) ELT 29 (Tri.-Del.) ;
The appellants also relied upon the decision of the Hon'ble Punjab and Haryana High Court in the case of Commissioner of Central Excise Vs. Omkar Steel Tubes Ltd. - 2008 (221) ELT 200 ( P & H ), wherein it has been held that the penalty under Section 11AC of the Act would be imposed to look into the various elements envisaged under Section 11AC which are satisfied including the presence of mens rea.
4. The contention of the Revenue is that the physical verification was conducted in the presence of authorized signatory of the appellants and the Production Manager admitted the shortage. Therefore, the duty was rightly demanded. The contention is that the appellants were cleared the goods without payment of duty which were found short, hence, the appellants are also liable for penalty under Section 11AC of the Act. It is also submitted by the Revenue that some finished goods were loaded in the truck which were found in the factory. There was no duty paying documents covering such goods.
5. I find that in this case, the physical verification was conducted in the presence of authorized signatory and the Production Manager admitted the shortage without raising any objection regarding correctness of quantities mentioned in the memo prepared by the Revenue Official in respect of stock position and hence, I find no infirmity in the impugned order whereby the demand is confirmed. In respect of the imposition of penalty under Section 11AC of the Central Excise Act, I find that there is no evidence on record that the goods were cleared clandestinely. Certain goods were found short and the contention is that the appellants tried to explain the shortage by saying that there was no logic as the actual weighment was not done and shortage were recorded only on eye estimation. In the decisions relied upon by the appellants, the Tribunal held that in case the goods found short regarding which the duty is confirmed and in the absence of any evidence regarding clandestine removal of the goods of the appellants, penalty under Section 11AC is not sustainable. In view of the above decisions, penalty under Section 11AC of the Act is set aside. Otherwise, the impugned order is upheld.
(Dictated and pronounced in the open Court) Sd/ (S. S. KANG) VICE PRESIDENT mm 5 Ex.Appeal No.68/09