2007 (8) TMI 218 - AT - Central Excise

Mere temporarily placement of steel slabs in workshop can t be said to be used for manufacture of other goods Slabs of identical description have identical weight is wrong method of weightment Held that there is no clandestine removal as there is no shortage of goods found.

Summary

Issues:
Challenge to order confirming central excise duty demand and penalty imposition.

Analysis:
1. The case involved a challenge by the Revenue against the order of the Commissioner (Appeals) confirming the demand of central excise duty and penalty imposition on the respondent. The dispute centered around the shortage of finished goods found during a physical verification at the factory premises of the respondent.

2. The Central Excise Officers discovered discrepancies in the finished goods during a visit to the factory premises, where steel slabs and rounds were found to be used for purposes other than intended. The adjudicating authority confirmed the demand of central excise duty based on the recalculated stock position, accounting for the usage of the goods in various sections of the factory.

3. The Appellate Commissioner, upon re-evaluating the evidence, found that the shortages were nominal and theoretical. The Commissioner emphasized that the variation in stock was minimal and relied on precedents to shift the burden of proof to the department to demonstrate actual shortage through physical weighment of the entire stock.

4. The Revenue's representative argued that the shortages were genuine and the explanations provided by the assessee were incorrect. The representative cited various tribunal decisions to support the contention that the shortages should lead to duty payment, emphasizing the need for accurate accounting and evidence in such cases.

5. The respondent's counsel supported the findings of the Appellate Commissioner, highlighting the marginal differences in the weight of steel slabs and rounds. The counsel referred to tribunal decisions where minor shortages were overlooked, especially when within tolerance limits, to argue against the demand for duty payment.

6. The Tribunal, after considering the arguments and evidence presented by both sides, upheld the findings of the Appellate Commissioner. The Tribunal noted that the respondent had adequately explained the shortages and that the goods found in the factory premises were not clandestinely removed, thus justifying the minimal variations in stock as permissible.

7. The Tribunal emphasized the importance of considering the actual stock found in the factory premises and the variations in weight indicated in the invoices to explain the nominal shortages. The Tribunal concluded that there was no basis for interfering with the Appellate Commissioner's decision, thereby dismissing the appeal.

In conclusion, the judgment revolved around the assessment of shortages in finished goods during a physical verification at the factory premises, with the Tribunal ultimately upholding the Appellate Commissioner's decision based on the explanations provided by the respondent and the nominal nature of the discrepancies found.