2002 (2) TMI 424 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess stock and unaccounted melting scrap.
2. Shortage of raw material and duty demand.
3. Appeal against the order of confiscation and penalty.

Issue 1: Confiscation of excess stock and unaccounted melting scrap
The appellants, engaged in manufacturing Flat Bars of Alloy Steel, were visited by the Central Excise department's preventive staff who found an excess quantity of 9.581 MTs of flat bars and 0.550 MTs of unaccounted melting scrap. The Central Excise officer seized the excess stock and scrap due to discrepancies in the recorded balance. The Asstt. Commissioner ordered the confiscation of the seized items under Rule 173Q of the Central Excise Rules, 1944. An option to redeem the goods on payment of a fine of Rs. 40,000 was provided, along with a duty demand of Rs. 10,903 and a penalty of Rs. 12,000 imposed on the party.

Issue 2: Shortage of raw material and duty demand
Upon physical verification, a shortage of 6.572 MTs of raw material, on which Modvat credit had been availed, was discovered. The partner of the party admitted to the excess and shortages. The Asstt. Commissioner confirmed the duty demand of Rs. 10,903 for the duty paid inputs found short. The party contended that the shortages were due to issues in recording entries in statutory records caused by the absence of the excise clerk. They argued that the excess goods were manufactured from the raw material found short, and a portion of the raw material was used to manufacture finished goods. The party requested a reexamination of their submissions, which were not adequately addressed in the previous orders.

Issue 3: Appeal against the order of confiscation and penalty
The party filed an appeal against the order of confiscation and penalty, which was rejected by the Commissioner (Appeals). During the appeal hearing, the party's counsel highlighted the submissions made before the original authority, emphasizing that the explanations regarding shortages and excess quantities should have been properly examined and findings recorded. The Tribunal found merit in the submissions and set aside the Commissioner (Appeals) order, remanding the matter to the original authority for a fresh examination of the facts and recording of findings after providing a reasonable opportunity of hearing to the appellants.

This comprehensive analysis of the judgment highlights the issues of confiscation, shortages, duty demands, and the appeal process, showcasing the legal proceedings and the Tribunal's decision to remand the matter for further examination.