Cprm Steels Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No.301/2001-CBE (GVN) dated 10.12.2001 passed by the Commissioner of Central Excise (Appeals), Tirichirapalli]

CPRM Steels Ltd. Appellant

Versus

Commissioner of Central Excise, Coimbatore Respondent

Appearance:

Shri J. Shankarraman, Advocate For the Appellant Shri L. Paneer Selvam, AC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :18.3.2015

FINAL ORDER No.40646/2015

1. The appellants have filed appeal against OIA dt. 10.12.2001. All the notices of hearing of appeal issued to the appellants have been returned undelivered as the appellants premises was not found. The appeal was fixed on several occasions but none appeared on behalf of appellant. Ld. Advocate was given time to seek instructions from the appellant. Ld. Advocate also submits that he is unable to get any intimation from them. Hence appeal is taken upon merits.

2. Vide impugned order, Commissioner (Appeals) confirmed demand of central excise duty of Rs.2,09,663/- and also imposed equal penalty under Rule 9(2) and Rule 173 (2) and 226 of Central Excise Rules read with Section 11AC on the quantity of shortage of finished products noticed during stock taking. Hence the present appeal.

3. Ld. Advocate submits that entire demand has been raised alleging clandestine removal of finished goods whereas there was no clandestine removal established in this case. Only on the physical stock taking done by the department, the shortage of 102.476 was noticed. He further submits that no physical weighment or no actual stock taking was conducted to arrive at the actual quantity of shortage whereas the department demanded Excise duty on 111.82 MTs based on the formula arrived by the adjudicating authority on the consumption of inputs. He also submits that SCN is hit by limitation and the physical stock taking was done on 15.10.1996. SCN should have been issued within 6 months whereas the notice was issued on 1.7.1999 and no investigation has been done and there was no evidence submitted the department. He also submits that appellants have admitted actual physical stock quantity of 102.476 MTs. He submits that every shortage of quantity of finished goods cannot be attributed to clandestine removal as the department failed to bring out any evidence of documents or weighment or any documents. Since there was no suppression, extended period cannot be invoked and no penalty is imposable. He relied on the following decisions :-

(1) J.C. Rolling Mills Pvt. Ltd. Vs CCE Kanpur 2012 (276) ELT 254 (Tri.-Del.) (2) CCE Nashik Vs Nashik Strips Pvt. Ltd.

2011 (264) ELT 576 (Tri.-Mum.)

4. On the other hand, Ld. A.R reiterates the finding of the adjudication order and the impugned order. He submits that in view of fact that Managing Director of appellant company has admitted the shortage in his statement, therefore imposition of penalty and demand of Central Excise duty as per the formula is justified.

5. After hearing both sides, and on perusal of SCN and adjudication order, I find that entire shortage of CTD bars was noticed during physical stock taking. The department has noticed shortage of 104.46 MTs. I find that there was no further investigation carried out except recording of statement from the M.D. of appellant company. The department has not established actual shortage so as to attribute clandestine removal. I also find that officers visited the unit on 15.10.96 for physical stock taking when the shortage was detected. SCN was issued on 12.7.99 invoking the extended period. I find that any shortage of finished goods not accounted in the records is liable for excise duty. Every shortage of finished goods cannot be attributed as clandestine removal and unless it is proved to the contrary with evidence. Further, I find that adjudicating authority has demanded duty on 111.82 MTs whereas the actual shortage was 102.476 MTs as per the SCN. I find that appellants are liable for payment of excise duty on the quantity of 102.476 MTs found short in their accounts on the date of stock taking. In this regard, I rely on Tribunals decision in the case of J.C Rerolling Mills Pvt. Ltd. Vs CCE wherein the Tribunal set aside penalty under Section 76 and also held that every shortage cannot be attributed in the case of clandestine removal. The case of CCE Nashik Vs Nashik Strips Pvt. Ltd. Para 5 & 6 of the order is reproduced below :-

"5.?Considering the facts that the stock taking was done on eye-estimation as recorded in the Panchanama and there is no specific allegation against the respondent by the Revenue that they have suppressed the fact with intent to evade duty. Mere accepting the stock taking on eye-estimation does not amount to suppression of facts although the respondent has agreed the duty liability, but to impose penalty the intention of the respondent to evade duty is also be ascertained. But in this case, it has not been ascertained by the investigating authorities that there was any intention to evade duty. In these circumstances, the penalty under Section 11AC is not imposable on the appellant. Hence, the impugned order is upheld.

6.?Accordingly, the appeal filed by the Revenue is dismissed and cross-objection filed by the respondent is also disposed off in the above terms."

6. In view of the foregoing decisions, I hold that appellant is liable for excise duty and it is restricted to actual shortage of 102.476 MTs found short during physical stock taking and the demand is upheld to that extent. Penalty is set aside. Accordingly appeal is partly allowed in the above terms.

(Operative part of the order pronounced in open court on 18.3.2015)

(R. PERIASAMI) TECHNICAL MEMBER

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