M/S. Star Steels vs C.C.E. & S.T. Lucknow

Customs Excise and Service Tax Appellate Tribunal27 February 2015

CitationAppeal No. E/55912/2013-EX(SM)

Ratio decidendi

The rule this decision rests on

Where invoices are issued before a panchnama is drawn but the goods covered by them remain physically in the factory and are cleared only later in the day, those goods are to be taken into account as part of the stock on hand when the physical shortage is measured; the invoices therefore do not explain away a shortage, and a demand for duty on the shortfall of finished goods is sustainable. Where duty on the shortage has already been paid before the show cause notice is issued, the penalty under Section 11AC of the Central Excise Act may be reduced to 25% of the duty, payable within a stipulated period, failing which the full penalty equal to the duty becomes payable.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

IN THE CUSTOMS, EXCISE AND SERVICE TAXAPPELLATE TRIBUNAL, NEW DELHIPRINCIPAL BENCH, COURT NO. IIAppeal No. E/55912/2013-EX(SM)

[Arising out of Order-in-Appeal No. 456-CE/LKO/2012 dated 02.11.2012 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Lucknow].

For approval and signature:

Honble Shri 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. Star Steels .Appellants

Vs.

C.C.E. & S.T. Lucknow .Respondent

Appearance:

Shri R.S. Sharma, Advocate for the Appellants

Shri G.R. Singh, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 27.02.2015

FINAL ORDER NO. 50533/2015-EX(SM)

Per Ashok Jindal:

The appellant is in appeal against the impugned order demanding duty and imposing penalty.

2. The facts of the case are that on 02.08.2010 the factory of the appellant was visited by the Central Excise Department Officers. Stock verification was done and it was found that there was a shortage of approximately 28 metric tonnes. The panchnama was drawn. No possible statement was given at that time by the Director of the appellant who paid the duty on the goods from shop for their factory. Thereafter, the show cause notice was issued to demand the duty and imposition of penalty on the appellant. Both the lower authorities confirmed the demand on shortage of impugned goods demanding the duty and also imposed equivalent amount of penalty on the appellant. Aggrieved from the said order appellant is before me.

3. Ld. Counsel appearing on behalf of the appellant submits that before the panchnama was drawn three invoices were issued by the appellant but goods pertaining to these invoices were lying in their factory and separated and these three invoices have not been considered while drawing panchnama. Therefore, there was a shortage of 28 metric tonnes of the finished goods. in fact there was no shortage if these invoices are taken into consideration. Therefore allegation of clandestine removal of finished goods is not sustainable. Consequently, he prayed that impugned order be set aside.

4. On the other hand Ld. AR submits that in this case invoices have been prepared before the panchnama was drawn and goods have been cleared after panchnama was drawn in the evening. It means when the panchnama was drawn goods were physically lying in the factory and same was found short. Therefore, the argument of the Ld. Counsel is not acceptable as if there was any issuance of the invoices of the appellant at that time the Director of the appellant could have explained instead of admitting the shortage. Therefore, impugned order is to be confirmed.

5. Heard the parties. Considered the submissions.

6. In this case on perusal of the invoices and panchnama produced before me, I find that the invoices were issued at 10.30, 10.40, and 11.35 hrs and goods have been cleared in the evening of the said day. If the contention of the Ld. Counsel is considered in their case also the invoice no.94 has been issued after drawing of the panchnama. Moreover, it is an admitted position that goods have been cleared in the evening. Therefore, goods were physically available in the factory of the appellant. In these circumstances, it cannot be held that the goods covered under the invoice no.92, 93 and 94 dated 02.08.2007 were not taken into consideration. Therefore, I do not find any merit in the arguments advanced by the Ld. Counsel. Therefore, the demand on account of shortage of finished goods is confirmed. Further I find that appellant has paid duty before the issuance of the show cause notice. Penalty under section 11AC of the act is reduced to 25% of the duty which shall be paid by the appellant within 30 days from today, failing which appellant shall be liable to pay penalty equal to duty.

7. With these terms appeals are disposed off.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

E/55912/2013-EX(SM)

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