M/S. Bindlas Duplex Ltd vs C.C.E. & S.T. Meerut-I

[Arising out of Order-In-Appeal No. 107-CE/MRT-I/2012 dated 25.04.2012 passed by CCE (Appeals) Meerut-I]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, 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. Bindlas Duplex Ltd. ...Appellant

Vs.

C.C.E. & S.T. Meerut-I Respondent

Appearance:

Mr. Sahil Mullick, (Advocate) for the Appellant

Mr. R. K. Mishra, DR for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing/ Decision. 27.07.2015

Final Order No. 53272/2015_

Per S K Mohanty:

This appeal is directed against the impugned order dated 25.04,2012 passed by the Commissioner (Appeals), Central Excise, Meerut-I wherein the duty demand on alleged shortage/ excess quantity of finished goods and inputs, confirmed in the adjudication order along with penalty, has been upheld.

1.1 The brief facts of the case are as under:

1.2 The appellant is engaged in the manufacture of Kraft Paper and Duplex Board quoted/ unquoted, the final products, falling under chapter 48 of the Central Excise Tariff Act, 1985. The appellant avails cenvat credit in respect of the inputs used in or in relation to the manufacture of final products. The factory of the appellant was visited by the Central Preventive Officers of Customs and Central Excise Meerut-I on 11.09.2008. During the course of physical verification of stock of finished goods and cenvatable raw materials, it was detected that with regard to quoted Duplex board, there is excess stock of 1046 bundles/ reels, weighing 61.988 MT and with regard to Kraft paper and cenvatable raw materials i.e. Caustic Soda Lime, Sodium Sulphate etc. there were shortages. On the basis of the shortage/ excess quantity of goods detected by the Preventive Unit, statements were recorded from the appellant. The appellant voluntarily deposited the duty attributable to the shortage of Kraft paper and the cenvatable raw materials and intimated the Department regarding such deposit.

1.3 Subsequent to deposit of the duty amount, the Department initiated Show Cause Proceedings against the appellant, which culminated in the adjudication order dated 15.02.2011, wherein stock of quoted Duplex boards found in excess, was confiscated and option was given for redeeming the same on payment of Rs. 2 Lakhs as redemption fine. Besides, Central Excise duty demand has also been confirmed on the shortage of Kraft paper and cenvatable raw materials and the amount deposited during investigation, was appropriated against such liability. The adjudication order also imposed penalty of Rs. 1,07,838/- under Rule 25(1) of the Central Excise Rules, 2002 read with section 11AC of the Central Excise Act, 1944. Further, an amount of 1,54,509/- as penalty has also been imposed under Rule 15(2) of Cenvat Credit Rules, 2004 for contravention of Rule 9(5) of the said rules. Being aggrieved with the adjudication order, the appellant had preferred appeal before the Commissioner (Appeals), which was disposed of vide the impugned order dated 25.04.2012, wherein the order of the adjudicating authority towards imposition redemption fine and confirmation of duty demand was upheld, but the amount of penalty imposed under Rule 25(1) of the Central Excise Rules, 2002 was reduced to Rs. 50,000/- and the penalty under Rule 15 of the Cenvat Credit Rules, 2004was reduced to Rs. 75,000/-. Feeling aggrieved with the impugned order, the appellant is in appeal before this Tribunal.

2. The Ld. Advocate Sh. Sahil Mullick appearing for the appellant submits that no proper weighment of goods has been conducted by the Department while investigating the matter and no weighment slips have been provided to the appellant. He further submits that goods have not been clandestinely removed from the factory since the same are available in the factory itself. It is his submission that since the production supervisor has not maintained the records timely, the discrepancy in the finished goods and the raw material was noticed. He further submits that since the shortage is very insignificant, in comparison to the material handed by the appellant, the quantum of redemption fine and the penalty imposed by the lower authority is not in conformity with the legal provisions. He further submits that the appellant had deposited the duty attributable to the shortage quantity of finished goods and inputs, on bonafide belief that the amount is very small and the appellant was not interested in agitating the issue.

3. Countering the submissions of the Ld. Advocate for appellant, Sh. R.K. Mishra, the Ld. DR for the Revenue submits that the plea of the appellant regarding non-supply of production slips during the course of investigation has never been made before either of the authorities below, hence the same is not tenable at his juncture. He further submits that since the shortage/ excess has been admitted by the appellant, and the duty amount attributable to such quantity of the finished goods have been paid suo moto, the confiscation of excess found goods, and imposition of penalty in the impugned order is legal and proper.

4. Heard the Ld. Counsel for both the sides and perused the records.

5. I find from the available records that there is no mention that the goods have been clandestinely removed from the factory. Even the excess found stock of finished goods i.e. quoted Duplex boards were laying in the factory at the time of visit of the Preventive Officers. It is also not the case of the Department that the shortage quantity of goods has been removed from the factory clandestinely, in view of the fact that neither in the SCN nor in the orders passed by the lower authorities, there is any mention to that effect. Hence in absence of any tangible evidence that the goods have been removed clandestinely by the appellant, I agree with the submissions of the Ld. Advocate that non-maintenance of proper records by the factory supervisor of the appellant has resulted in shortage/ excess in the stock of the goods. However considering the fact that the appellant has not maintained proper records, which is statutorily required to be maintained, I am of the view that the appellant is liable to pay the redemption fine and the penalty imposed by the authorities below. However considering the gravity of the case, I am of the view that the ends of justice will be met if the penalty imposed under Rule 25 of the Central Excise Rules is reduced to Rs. 20,000/- and penalty imposed under Rule 15 of the Cenvat Credit Rules is reduced to Rs. 25,000/-.I am also of the view that the redemption fine can also be reduced to Rs. 67,441/- i.e. equal to the Central Excise duty payable on removal of impugned goods.

6. In view of above, the impugned order is set aside the appeal is partly allowed to the extent of reducing the quantum of penalties imposed under the Central Excise and Cenvat statute to Rs.20,000/- and Rs.25,000/- respectively and the redemption fine to Rs.67,441/-.

(Dictated and pronounced in open court)

(S. K. Mohanty) Member(Judicial)

Neha

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