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2015 (11) TMI 669 - AT - Central ExciseDenial of CENVAT Credit - Penalty u/s 11AC - Held that:- Appellants are using different types of raw material viz. MS Scrap, Pig Iron, Sponge Iron etc. However separate raw-materials account for each item admittedly has not been maintained at all. It is strange and surprising that raw-material account was maintained in a consolidated manner. The appellants have not disputed the short found at the time of stock taking which was undertaken on 3 days. According to the Register the balance should have been 2651.122 MTs whereas physical stock was found to be only 978.704 MTs. It is surprising that such a huge shortage which works out to almost 73% was not noticed by the melter or by the Managing Director or by the Central Excise in-charge over a period of 4 years. This itself shows that in spite of the huge difference between the actual raw material available and the stock as per the Register, the assessee did not take any steps whatsoever to check whether the accounting is being done correctly or not. The method adopted by the assessee for maintaining consolidated raw material account itself is a strange method of accounting. It was also admitted that from July 2008 onwards they were not even maintaining the record of use of raw materials on which cenvat credit has been taken. The claim that raw material accounting was done on a hypothetical basis is not at all logical in view of the fact that the melter of the appellant knew how much quantity is required for the furnace each heat to be charged. The melter could have and probably has given the correct consumption detail and also output details for different charge into the furnace, the capacity of which is 5 tonnes. Then there is no answer to the question why accounting was done in such a manner. Under these circumstances how there could be so much difference has not been explained at all. According to Shri. Raja Ramchander Rao, the Central Excise In-charge, the production and consumption figures were given by the melter. If this is so there could not be any shortage at all. Under these circumstances no other conclusion can be reached other than the conclusion that appellant has failed to account for the raw material on which cenvat credit has been taken and show that the same has been used for manufacture of finished goods on which duty has been paid. This is an obligation cast on the manufacturers who take cenvat credit and it is not necessary for the department to prove clandestine removal of raw material or finished products. The obligation to show that the raw materials have been used for the purpose they were obtained and accounted for in accordance with law is on the assesee and in this case they have failed to discharge the same. Therefore the appeal has no merits - Decided against assessee.
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