Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Nagpal Steels (P) Ltd. on 30 June, 1995
Equivalent citations: 1995(79)ELT463(TRI-DEL)
ORDER Gowri Shankar, Member (T)
1. The Central Excise officers visited the premises of the respondents' factory at Ludhiana and took stock of the ingots in the factory. There were nearly 2,000 such ingots and in view of the difficulties that would be faced for weighing this lot, it was agreed that truck load of ingots selected at random would be weighed. The weight of one ingot was determined to be 92.375 kg. Accordingly, the total weight of ingots was worked out at 265.115 MT. Since the recorded balance in the RG was 250.560 MT, the excess of 14.555 MTs containing 157 ingots was seized. After adjudication proceedings, the Assistant Collector ordered confiscation of this quantity with an option to redeem it on a fine of Rs.10,000/-. He also imposed a penalty of Rs. 5,000/- on the respondents.
2. The Collector (Appeals) before whom the assessee went, held that there was no provision in law to take action on the basis of average weight. She therefore, set aside the Assistant Collector's order. This order is now being challenged before this Tribunal.
3. Sh. B.D. Bhagat, DR adopts the arguments in the appeal. The determination of the weight on the basis of average weight of an ingot was with the consent of the assessee. There was nothing wrong in the method as ingots of the same size and dimension are produced out of moulds of the same size.
4. As against this, Sh. Harbans Singh, Advocate for the respondents says that consent is not sufficient to determine the duty payable. Duty must be paid under the authority of law as law does not recognise consent. He cites the Supreme Court decision in the case of Dunlop India Ltd. - AIR 1977 SC 597 to say that there is no estopple in law. He cites the decision of this Tribunal in Simplex Castings v. C.C.E. - [1994 (74) E.L.T. 585] to say that average weight cannot be the basis for determining the quantum of demand. Alternatively, he submits that even if the weight is determined on the basis of average, confiscation and penalty are not sustainable. The number of ingots was the same and the difference is insignificant.
5. It is clear from the order of the Assistant Collector that each of the ingots was not of the same weight. The weight of each ingot was arrived at by dividing the weight of a truck load of ingots by their number. Thus the claim in the appeal that ingots were of the same weight having been made cast in moulds of the same size fails. However, it is not clear from [the papers as to how] the assessee had entered the balance as 250.560 MT. It would appear from the reply to the show cause notice that the general practice in the industry was to take the average weight. The reply says "Generally in steel industry, average weight of ingots is taken and recorded in statuory records. This is done by taking out the average weight and multiplying the weight with the number of pieces. It is impossible that actual weight of ingots turns out more or less than the average weight." Thus, it is clear that the assessee was maintaining the records on the basis of averages.
6. I do not see how the assessee can now object to the officers adopting the same method which he adopted and which he says the entire industry adopts. It is often the practice in many industries where goods are handled in bulk that an average is taken to calculate the total weight or volume of a commodity. It would in such cases, not be possible practically to weigh or measure each unit. It cannot be said for example, that a consignment of say tins of vanaspati is so precisely weighed that it is possible to say that each tin is not more than or no less the quantity that it is stated to contain. There is always some degree of difference in these matters. In these circumstances, one cannot say that duty is not calculated according to law. What is being done in these cases is to arrive at the weight according to one's best judgment using the available method. This is precisely what has been done in the present case. After all, the method of weighment was mutually arrived at. It was up to the assessee to refuse to agree to this method in which case, the officer would have no objection but to weigh the total stock. The assessee neither suggested or agreed to accept this method as such to avoid inconvenience to itself as for any other reason. Even if one assumes that the assessee was overwrought by the presence of the officers he could have in a day or two protested the issue in which case, the weighment could have been arrived at. However, the assessee cannot turn around when the goods are not available and say that the method adopted was wrong. The case law cited by the Advocate is distinguishable. There is no estoppel against law in the sense that duty cannot be determined in accordance with law. However, where the assessee himself is of the opinion that average weighment which is prevalent in the industry and which he himself has been adopting, should be accepted. The question of estoppel would not arise. This Tribunal's decision in the Simplex Castings case is distinguishable because there even a sample weighment was not done. I am therefore, of the view that the method of weighment resorted to was not incorrect. Having said that, I would suggest that in order to avoid disputes of such kind, such goods would be weighed as far as possible. The excess comes to about 5.8%. This is not a figure which one could feel would naturally arise due to difference in weight. I am therefore, of the view that the confiscation was warranted. However, I note that there is nothing to suggest that there was underdeclaration to evade duty. Taking all these facts into consideration, I set aside the penalty imposed on the respondent and reduce the redemption fine to Rs. 1,000/-.