M/S. Shri. Shyam Metal Mfg. Pvt. Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in- Appeal No. SB/115& 116/Th I/09 dtd. 06/11/2009 passed by the Commissioner(Appeals) of Central Excise, Mumbai Zone-I]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : 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?

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M/s. Shri. Shyam Metal Mfg. Pvt. Ltd. Shri. Suresh A. Bundiwal, : Appellants

VS

Commissioner of Central Excise, Thane-I : Respondent

Appearance

None for the Appellants Shri. Ashutosh Nath, Asst. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 15/4/2015 Date of decision /2015

ORDER NO.

Per : Ramesh Nair

The appeal is directed against Order-in- Appeal No. SB / 115 &116/ThI/09 dtd. 6/11/2009 passed by the Commissioner (Appeals) of Central Excise, Mumbai Zone-I, wherein Ld. Commissioner upheld the Order-in-Original No. 151/2007-08 dated 28/9/2007 and rejected the appeal filed by the appellant. The fact of the case is that on the visit of officers of Central Excise Headquarters(Prev), Central Excise, Thane I, Commissionarate to the unit of the appellant on 28/3/2006, it was found excess stock of 61 MT of M.S. Ingots in the factory as against recorded stock in RG1 register. The said excess stock was found on stock verification by the officer in presence of the representative of the appellant and same was recorded under Panchanama. The said excess stock was seized and handed over to the appellant under supratnama on 28/3/2006. During the investigation, statement of Shri. Suresh Attarshingh Bundiwal, Director of the appellant company was recorded who accepted the excess stock of 61 MT of M.S. Ingots. The appellant on the said excess stock paid excise duty of Rs. 1,79,194/- thereafter a show cause notice was issued which is culminated into Order-in-Original dated 28/9/2007, wherein following order was passed:

Order

1. I confiscate 61 M.T. of M.S. Ingots valued at Rs. 10,98,000/- under Rule 25 of the Central Excise Rules, 2002. I allow these goods to be redeemed on payment of an amount of Rs. 3,30,000/- .

2. I confirm the demand of Rs. 1,79,194/- under Section 11A of the Central Excise Act, 1944.

3. I appropriate the amount of Rs. 1,79,194/- paid by the assessee vide TR 6 Challan No. 14/05-06 dated 05.04.05 against the above demand.

4. I impose a penalty of Rs. 1,79,194/- on M/s. Shri. Shyam Metal Manufacturing Pvt. Ltd. Wada under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.

5. I impose a penalty of Rs. 25,000/- on Shri. Suresh Bundiwal, Director under Rule 26 of the Central Excise Rules, 2002.

Aggrieved by the said order the appellant filed appeal before the Commissioner (Appeals) which was rejected by upholding the order-in-original, Aggrieved by the impugned Order-in-Appeal the appellant filed this appeal.

2. None appeared on behalf of the appellant. I observed that the matter was earlier listed for hearing on 23/1/2015, 13/3/2015 and even today when the matter was called for no one appeared on behalf of the appellant. This shows that the appellant is not interested in pursuing their appeal. However in the interest of justice, I am taking up appeal for final disposal on the ground of appeal made in the appeal memorandum as also record available.

3. On the other hand, Shri. Ashutosh Nath, Ld. Asst. Commissioner (A.R.)appeared on behalf of the Revenue and reiterates the findings of the impugned order. He submits that though the appellant made submissions before the lower authorities as well as before this Tribunal in the ground of appeal that method of stock taking was not proper therefore the confiscation of goods and consequences are not sustainable. In this regard he submits that while taking the stock of the goods in the factory premises of the appellant the representative of the appellant was present who signed the panchanama. As regard excess stock of 61 MT of M.S Ingots the appellant has not raised any objection on spot. He further submits that director of the appellant company in his statement recorded under Section 14 of Central Excise Act accepted the excess stock, therefore confiscation of the goods was correctly upheld by the lower appellate authority. On query from the bench that confirmation of excise duty and consequent penalty should not have been made as goods were not cleared from the factory. He submits that since goods were found in excess and same was excisable goods and the said duty was paid by the appellant, the adjudicating authority as well as the Commissioner(Appeals) has correctly confirmed the demand of such duty. He placed reliance on following judgment.

(a) Shree shyam pulp & Board Mills Ltd. Vs. CCE [2014(309) E.L.T. 497(Tri. Del)

(b) CCE Vs. ESS Kay Polymers [2004(165) ELT 566(Tri-del.)

(c) Complex Steels (P) Ltd. vs. CCE[1995(79) ELT 698(Tribunal)

(d) Bajrang Petro Chemicals (P) Ltd Vs. CCE[2014-TIOL-2254-HC-ALL-CX)]

3. I have carefully considered the ground of appeal made in the appeal memorandum as well as the submission made by Learned A.R.

4. In this case during stock verification by the Central Excise officer, the stock of 61 MT of M.S. ingots was found in excess as against the recorded stock in RG1 register. During the stock verification and recording of Panchanama no dispute was raised by the appellant. Moreover, Director also admitted the verification of stock. I have considered the submissions made in ground of appeal that stock verification was done on average basis and actual weighment of entire stock was not done, therefore confiscation of goods is not justified. I find that whatsoever method was adopted by the Central Excise officers and as a result variations of stock was found. If the appellant is not satisfied with method of stock taking, they had liberty to dispute method and would have suggested other method of stock taking. However the appellant has not raised any such dispute. Therefore in the facts and circumstances of the case, the excess stock found in the stock verification could not be disputed merely on verbal explanation. The appellant during the seizure of the goods could have represented for re-checking of the stock, which was not opted by the appellant.

In view of this position, I am of the view that excess stock of 61 MT of M.S. Ingots valued of Rs. 10,98,000/- could not be disputed. In the impugned order the Ld. Commissioner(Appeals) has confirmed demand of duty amounting to Rs. 1,79,194/- which was already paid by the appellant and penalty of equal amount was also imposed. In this regard, I am of the view that first of all the appellant was not required to pay duty on such excess stock consequently Ld Adjudicating authority should not have confirmed the demand of such duty for the reason that excise duty is payable only at the time of clearance of the goods. In the present case it is undisputed fact that the excess stock was lying admittedly in the factory and was not cleared from the factory, therefore confirmation of demand and consequential penalty under Section 11AC is not correct. However the goods are very much liable for excise duty. If the same have already been cleared, the said duty shall stand adjusted towards the duty liability of the said goods and if the goods are still lying in the factory as and when the goods is cleared this duty shall be treated as payment of duty on the clearance of the said goods.

As regard the penalty, I observed that excise duty at the time of seizure of the goods was not payable, consequently penalty under Section 11AC also wrongly imposed. However since goods were confiscated and I uphold the confiscation, penalty towards confiscation is imposable. I therefore reduce the penalty from Rs. 179194/-to Rs. 25,000/-. As regard redemption fine, taking into consideration overall facts and circumstances I am of the view that redemption fine of Rs. 3,30,000/- is higher side therefore the redemption fine is reduced from Rs. 3,30,000/- to Rs. 2 lakhs. As the regard the Appeal No. E/213/10 of Shri. Suresh A. Bundiwal, Director of the appellant company, I find that since offence involved in this case is non-accountal of goods in the statutory records and maintenance of excise records is handled by the staff of the appellant company. The appellant, in my considered view merely for improper accounting of stock in the statutory records by the appellants staff, Shri. Suresh A. Bundiwal can not be penalised under Rule 26. Therefore the appeal of the Shri. Suresh A. Bundiwal liable to be allowed.

In view of my above discussion, I pass the following order:

(a) Confiscation of goods is upheld.

(b) Redemption fine reduced from Rs. 3,30,000/- to Rs. 2 lakhs.

(c) Penalty of Rs. 1,79,194/- is reduced to Rs. 25,000/-

(d) Payment of duty Rs. 1,79,194/- shall be adjusted against clearance of excess stock of 61 MT of M.S. Ingots.

(e) Appeal No. E/213/10 of Shri. Suresh A. Bundiwal, is allowed.

(order pronounced in court on __________)

Ramesh Nair Member (Judicial)

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