2007 (2) TMI 503 - AT - Central Excise

Confiscation - Excess goods found in factory - Demand - Clandestine removal - Evidence - Shortage of inputs

Summary

Issues:
1. Confiscation of excess MS bars and ingots
2. Demand for duty on goods cleared without payment
3. Penalty imposition
4. Verification of excess goods by weighment
5. Evidence requirement for demand sustainability
6. Reversal of credit on inputs found short

Confiscation of Excess MS Bars and Ingots:
The case involved the confiscation of excess MS bars and ingots found during a verification at the factory premises. The appellant argued that no weighment verification was conducted, and the excess quantity was determined on an estimate basis. The Tribunal found merit in the appellant's contention, noting that the excess was only 1.78% of the total quantity mentioned in the statutory record. As a result, the confiscation of 13.340 MTs of goods was set aside.

Demand for Duty on Goods Cleared Without Payment:
A show cause notice was issued for the confiscation of excess goods and a demand for duty on goods cleared without payment based on kaccha slips. The Revenue contended that the short ingots were used in the manufacture of final products. However, the Tribunal found that there was no evidence presented regarding the manufacture of goods from the short inputs. The demand based on loose slips, which contained detailed information, was upheld, amounting to Rs. 9480.

Penalty Imposition:
The adjudicating authority had imposed a penalty, which was later reduced by the Commissioner (Appeals) to Rs. 15,000. The reduction was based on the lack of evidence showing that the short goods were used in the final product manufacturing. The penalty reduction was upheld by the Tribunal.

Verification of Excess Goods by Weighment:
The appellant raised concerns about the lack of weighment verification by the officers to determine the excess goods. They argued that the quantity discrepancy was based on estimates and not physical verification. The Tribunal acknowledged this argument and set aside the confiscation of the excess goods.

Evidence Requirement for Demand Sustainability:
The Revenue contended that the short ingots were used in manufacturing final products, justifying the duty demand. However, the Tribunal found that without evidence supporting this claim, the demand was not sustainable. The Tribunal upheld the decision to set aside the demand based on the lack of proof.

Reversal of Credit on Inputs Found Short:
The Revenue sought reversal of credit on inputs found short, alleging their use in goods cleared without duty payment. However, as this demand was not part of the original show cause notice, the Tribunal found no merit in the Revenue's appeal and dismissed it. The Tribunal upheld the decision to set aside the demand due to lack of evidence regarding the use of short inputs in manufacturing.