Custom, Excise & Service Tax Tribunal
M/S Haldyn Glass Ltd vs Commissioner Of Central Excise, ... on 30 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/224/91 (Arising out of Order-in-Original No. V-ADJ(CHP 70)15-52/90/101 dated 21.9.1990 passed by the Collector of Central Excise, Mumbai-II). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Haldyn Glass Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai-II Respondent Appearance: Shri Yogesh S Patki, Advocate for Appellant Shri S.V. Shashtri, AC (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 30.04.2015 Date of Decision: 30.04.2015 ORDER NO. Per: Shri Anil Choudhary
The appellant, M/s Haldyn Glass Ltd., is in appeal against Order-in-Original No. V-ADJ(CHP 70)15-52/90/101 dated 21.9.1990 passed by the Collector of Central Excise, Mumbai-II in which order for confiscation of 3,64,682 excess glass bottles valued at Rs.4,41,669.64 seized from the appellant under Rule 173Q and allowed redemption thereof on payment of fine of Rs.1 lakh. A shortage of 11,61,269 bottles valued at Rs.11,03,264.10 and the duty there on amounting to Rs.4,41,305.64 (Basic) and Rs.22,065.20 (Special Excise duty) was confirmed under Rule 9 of Central Excise Rules, 1944 read with Section 11A of the Act. Further penalty of Rs.20,000/- was imposed on the appellant under Rule 9(2), 52A, 173Q and/or 226 of Central Excise Rules, 1944. Further, order was made for confiscation of land, building, plant, machineries and materials used in connection of the manufacture and production , storage, removal or disposal of such goods and any other excisable goods on such land or such building or produced or manufactured with such plant, machinery, materials or things. The appellant was given option to redeem the aforementioned property by paying a fine of Rs.50,000/-.
2. Being aggrieved the appellant preferred an appeal before this Tribunal. Vide final order dated 30.12.1999 this Tribunal had rejected the appeal. Being aggrieved, the appellant preferred an appeal before the Hon'ble Bombay High Court being Central Excise Reference Application No. 30 of 2000 and vide order dated 6.10. 2003, the Hon'ble High Court found that the order of the Tribunal was passed after a gap of two years from the date of hearing and accordingly, the same was set aside without entering into the merits of the order of the Tribunal and the matter was remanded back with the direction of hearing the matter afresh after giving reasonable opportunity to the appellant, following the principles of natural justice.
3. Heard the parties.
4. The learned Counsel for the appellant states that the appellant is a manufacturer of glass bottles in their factory at Goregaon (East), Mumbai. The annual production was of around 17 crores bottles and the appellant was paying duty about Rs.7 crores per annum. Their daily production was around 6 lakh numbers of glass bottles at any time, their stock would be around 2 crores numbers of glass bottles. Due to increase in production every year, the capacity of their bonded store room was found to be inadequate and hence they approached the department to allow them to store the goods in adjacent premises. However, the permission was not granted despite several correspondence by the appellant including the letter sent to the Collector of Central Excise and Customs during the period 1988-99. On 27.1.90 at about 8.30 pm there was a fire in their factory, which affected a part of the bonded store room. The appellant had immediately informed the incidence of fire to concerned authority i.e. Fire Brigade and Police and also informed in the writing to the department on 29.1.1990. In pursuance of the incidence of fire after about 15 days on 15.2.1990, the Revenue undertook stock taking which continued till 17.2.1990. It is further pointed out by the Counsel that stock taking started in evening of 15.2.1990 and continued till the morning of 17.2.1990. Further, vide letter dated 21.2.1990, the Asstt. Collector of Central Excise informed the appellant to stock taking of finished excisable goods lying in the factory premises as well as various places of the building under the supervision of the Central Excise officer, shortage was ascertained as compared to the RG-1 register, the same is detailed in the Annexure. On the alleged shortages, a short payment of Central Excise duty was computed of Rs.4,41,305.64 (Basic duty) and Rs.22,065.20 (Special Excise duty), which was directed to be paid or debited immediately. The appellant immediately replied stating that the alleged shortages as per the show-cause notice in the annexed list was incorrect as the goods were very much present physically in the factory premises and requested the Assistant Collector to depute the Revenue officers immediately so that the applicant can conclusively prove that there was no shortage as alleged. Along with the letter, the appellant also annexed a copy of the bill and gate pass for clearance of the some of the goods after 17.7.1990. Therefore, it was further shown that goods allegedly shown as shortage in the list annexed with letter of the Assistant Collector dated 21.2.1990, were actually cleared after 10.2.1990, the same was informed to the Revenue along with copy of the gate pass. Despite this, there was no response from the Revenue. It is the contention of the appellant that stock taking have not been done properly and there are several discrepancies.
4.1 As regards the alleged excess goods, it was pointed out by the appellant that stock taking not having been properly done, the excess goods shown in the Panchanama was incorrect and this was obvious on the fact that the some of the goods shown in the excess were also appearing in the list of shortages.
4.2 A show-cause notice dated 30.5.1990 was issued on the aforementioned facts wherein, it was alleged that S.K. Amin, employee of the appellant having deposed that the godown assistant are well conversant with the stocking method of bottles and varieties of bottles and hence there was no mistake or lapse in physical stock taking of the stock lying in premises. Further, the said Mr. Amin has also accepted the correctness of stock taking and stock position ascertained and the variations in stock viz. shortage and excess detected. It was further stated that Mr. P.R. Shetty, another employee of the appellant has deposed that the stock of excisable goods ascertained physically was the actual stock lying in the premises and that he was present personally during the stock taking and being satisfied accepted the shortage and excess, noticed in the stock position. Accordingly, it appeared to the Revenue that the appellant have not paid duty amounting to Rs.4,64,313.40 admittedly on goods found short as alleged in the show-cause notice and the assessee company have manufactured goods valued at Rs.4,60,708.84 but did not account for in the Central Excise statutory record viz. RG-1 register with an intent to clear such goods clandestinely evading payment of duty. It further appeared to the Revenue that the appellant company failed to determine proper amount of Central Excise duty leviable thereon and to pay the same and further to clear the said goods only under the cover of Central Excise document and further claim to account for the excisable goods found in excess as mentioned and have thus, contravened the provisions of Act and the Rules. Accordingly, it was proposed to recover the same with a further proposal as to why not penalty be imposed under Rules 173Q and Rule 9(2), Rule 52A read with Rule 226 ibid. It was further proposed to confiscate the excisable goods under seizure including land, building, plant, machinery, materials, conveyance, animal etc. used in connection with manufacture of goods.
4.3 The appellant contested the show-cause notice and in reply dated 29.6.1990, wherein it is mentioned the difficulty faced in stocking the manufactured goods for shortage of place and stocking the goods in the existing premises, glass being a delicate commodity subject to breakage. It is further stated that inspite of notice given within 48 hours of fire, i.e. on 29.1.1990, no response was received and stock taking was taken up only on 15.2.1990 and secondly all the companys documents were kept in the factory and the stock taking was undertaken on the same date at about 6.30 p.m. by which time, the office of the appellant had been closed. There were only workmen who were working in the second shift available in the premises. It is further mentioned that due to night and lack of proper office staff and also due to proper light available in the night hour, the discrepancies in stock taking have occurred. It was also stated that on 20.2.1990 along with subordinate official, the Range Supdt. had come for stock taking in the factory premises at about 4 p.m. At about the same time, the Asstt. Commissioner also came along. As the Managing Director had to leave the office to attend urgent work at home, the official of the Revenue got annoyed. At the same time, goods alleged to be in excess were seized under Panchanama. On the very next date on 21.2.1990, as aforementioned, letter was issued demanding the excise duty short paid on the alleged discrepancies found in the stock. It is further on record that the appellant has pointed out the discrepancies and also prayed for fresh stock taking which was denied, without any ostensible reason.
4.5 The Counsel for the appellant urges that discrepancies found, the shortage is about 1%. It is not deniable that glass being a commodity easily breakable, needs proper space for stocking. In the facts and circumstances that they were stocking excess stock than it can safely be safely be stocked in the premises, damages and discrepancy is normal.
5. The learned AR appearing for the Revenue relies on the impugned order. The learned AR also relies on the ruling of this Tribunal in the case of Hans Steel Rolling Mills Vs. Commissioner of Central Excise, Ludhiana 2007-TIOL-2206-CESTAT-DEL, wherein the facts were that the assessee was engaged in manufacturing of steel rolled products. On 2.8.2002 a truck belonging to the firm was intercepted and on inquiry it was noticed that the bill was for 13.585 MT of MS Angles. On weighment on a nearby Kanta, the material loaded was found to be 12.255 MTs of re-rollable scrap. On scrutiny of the records, it was found that the assessee had not issued any invoice/duty paying document for the re-rollable scrap which was being transported in the said truck nor the same was accounted in the record. The said discrepancies and/or clandestine removal were admitted in statement of the partner. Such facts I find are not obtaining in the present case and I hold that the same is not applicable in this case.
5.1 The learned AR also relies on the ruling in the case of Commissioner of Central Excise Vs. Goyal Ispat Ltd. 2010-TIOL-1684-CESTAT-MAD, wherein shortage of goods were found on stock verification. The departments case was found on the statement of the Manager of the assessee company and the mahazar, clearly showing shortage. The assessees defence which had been accepted by the Commissioner (Appeals) to the effect that no proper investigation was conducted and therefore, the shortages cannot be ascertained. However, the Tribunal found that the mahazar clearly recorded the shortage and the same was duly acknowledge by the Manager about correct recording of the shortage. It was further fact that Inspector of Central Excise stated that he was not present during the verification, though it appeared that he is the person, who drew up the mahazar. The Manager stated that the same lorry that was available in the factory was used for weighment of the goods while mahazar does not say anything about any lorry being put to use for weighment, does not make any material difference for the reason that it is not as if mahazar has noted that no lorry at all was used for weighment. I find that such facts are not obtaining in the present case as such, I hold that the said ruling will not apply in the present case.
6. Having considered the rival contentions, I find that it is an admitted fact that the appellant factory was having an average stock of two crore bottles. As per the finding in the Order-in-Original, the shortages found by the Revenue is 11,61,269 bottles and excess worked out as 3,64,682 bottles. Thus, the net shortage is 7,90,387, as worked out by Revenue. For calculation purpose rounding off to 8 lakh bottles, in view of the average stock of 2 crore bottles, the shortage worked out is about 4%. I hold that this is a normal percentage of discrepancy in the nature of business of the appellant. Further, I take notice of the fact that the stock taking had been started at 6.30 pm on 15.2.1990 which was continued throughout the night in poor lighting condition and again the same was continued on 16.2.1990 and was continued in the morning of 17.2.1990. Thus, the mistakes or errors in stock taking cannot be ruled out, and as such, the shortage and/or excess pointed out by the Revenue cannot be held to be perfect. Thus, I hold that the shortages or excess found is the normal variation in stock taking for which no adverse intention is called for. Accordingly, I allow the appeal and set aside the impugned order. The appellant shall be entitled to consequential benefit if any, in accordance with law.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 8