M/S. Ashirwad Steels And Alloys Pvt Ltd vs Commissioner Of Central Excise
- CitationExcise Appeal No. 59655 of 2013 - Ex (SM)
Ratio decidendi
The rule this decision rests on
Where stock shortages are established on physical verification, the burden of explaining them rests on the assessee, and a shortage of raw material that cannot be attributed to ordinary variation in weighment entitles the department to require reversal of the Cenvat credit availed on the shortfall. Shortages of finished goods of less than about 9% that are attributable to weighment on an average basis, as recorded in the panchnama and the method admitted by the assessee, do not sustain a demand of duty on the goods found short. Where the assessee has already paid the duty on the shortage at the time of investigation, a penalty on that shortage is to be reduced to a proportion of the duty confirmed, here 25%, as the original penalty was on a high side in light of the voluntary payment.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-In-Appeal No. MRT-EXCUS-000-APP-078-13 dated 30.4.2013 passed by Commissioner of Central Excise & Service Tax(Appeals), Meerut I ]
For approval and signature:
Honble Mr Ashok Jindal, Member (Judicial)
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 Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
M/s. Ashirwad Steels and Alloys Pvt Ltd. Appellants
Vs.
Commissioner of Central Excise Respondent
& ST, Meerut I
Appearance:
Shri Alok Arora, Advocate for the Appellants
Shri G R Singh , AR for the Respondent
CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial)
Date of Hearing /decision: 6.4.2015
FINAL ORDER NO. A/ 51466 /2015-Ex(SM)
Per Ashok Jindal :
The appellant is in appeal against the impugned order wherein duty has been demanded on the shortages of raw material / finished goods found short at the time of investigation.
2. The facts of the case are that the appellant is a manufacturer of MS bars from MS ingots. On 9.12.2010, the investigation was done at the factory of the appellant and it was revealed that there is shortage of 21.095 of MS bars (finished goods) and shortage of 60.585 MT of MS ingots ( raw material). Therefore, the case has been booked against the appellant for denial of Cenvat credit on the raw material found short and for demanding duty on finished goods found short. A show cause notice was issued and on adjudication demand was confirmed along with interest and penalties equivalent to the duty was also imposed. The said order was upheld by the learned Commissioner (Appeals). Against that order, appellant is before me.
3. The learned counsel for the appellant submits that shortage of finished goods is only of 21.095 MT against the physically verified goods found in stock were of 250.025 MT. Therefore, the shortage is less than 10% and that may be due to variation during stock taking process. He further submits that in case of raw material also weighment has been done on average basis therefore shortages is negligible and hence, demands are not sustainable.
4. On the other hand, learned AR opposed the contention of the learned Counsel and submits that the goods have been physically verified in the presence of appellants and in the case of finished goods, shortage is around 8.5% and in the case of raw materials is more than 20% and the method adopted for weighment of goods has been admitted by the appellant themselves. Infact the appellant themselves has devised method of weighment of the goods which generally they are doing in their course of business. Therefore, the impugned order is to be upheld.
5. Heard the parties. Considered the submissions.
6. I find that at the time of visit, shortage of finished goods as well as raw material was found. Infact in the case of raw material, shortage is more than 20% and if method of weighment devised by the appellant is taken into consideration then the shortage is 20%. There may be variation from 5% to 10% or like percentage but cannot be such a huge variation in counting the stock on average basis. Therefore, contention of the learned counsel that weighment has been done on average basis is not acceptable. In these circumstances, for the shortage of raw material, appellant is required to reverse the Cenvat credit availed thereof. Further, I find that in case of finished goods, the shortages worked out is less than 9% which may be due to average methods suggested by the appellant during the course of physical verification of the goods of 250 MT and as per Panchnama also, the weighment has been on the basis of average weight of bundle of each size. Therefore, variation may occur due to the weighment done on average basis. Therefore, demand of duty on finished goods is set aside. With these terms impugned order is modified.
7. With regard to penalties, the penalty attributable to shortage of raw material is on high side as appellant has paid the duty at the time of investigation itself. Therefore, penalty is reduced to 25% of the duty confirmed on raw material found short. With these terms, appeal is disposed.
(dictated and pronounced in the open court )
( Ashok Jindal ) Member(Judicial)
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