2001 (1) TMI 125 - AT - Central Excise

Summary

Issues:
1. Shortage of polished granite slabs found during stock verification.
2. Duty demand and penalty imposed by the adjudicating authority.
3. Arguments regarding wastage during polishing process and incorrect assessment value.
4. Failure to maintain RG1 Register for wastages during polishing.

Analysis:
1. The case involved a shortage of polished granite slabs found during stock verification, leading to a duty demand and penalty imposition by the adjudicating authority. The appellant, a 100% Export Oriented Unit engaged in granite slab manufacturing, argued that the shortage was due to wastage occurring during the polishing process, which was not recorded in the RG1 Register. The Tribunal set aside the initial order and remitted the matter for reassessment.

2. The appellant contended that the wastage during polishing was not accounted for in the registers, as employees were paid at a piece rate and recording breakages would reduce their salary. The Tribunal noted that the shortage found was negligible compared to the total production, and there was no evidence of clandestine removal of goods. The Department failed to establish that the missing slabs were removed from the factory premises, leading to the overturning of the Commissioner's finding.

3. Another argument raised was the incorrect assessment of the value of the missing slabs by the Commissioner. The fixed value was deemed exorbitant, with no material to support the assessable value determination. The Tribunal agreed with the appellant, stating that the duty quantification and penalty imposition were unsustainable due to the lack of proper valuation evidence.

4. The absence of an RG1 Register for recording wastages during the polishing process was highlighted as a failure on the part of the appellant. However, the Tribunal found that the Department's failure to consider broken slabs and tiles found in the factory premises led to the incorrect assessment of the shortage. Ultimately, the Tribunal set aside the Commissioner's order, allowing the appeal with consequential reliefs.