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2015 (8) TMI 148 - CESTAT CHENNAI

2015 (8) TMI 148 - CESTAT CHENNAI - 2016 (335) E.L.T. 721 (Tri. - Chennai) - Duty demand - shortage of fabrics - Suppression of facts - Invocation of extended period of limitation - Held that:- Show-cause notice was issued for confiscation of the excess goods seized at their units. The adjudicating authority had decided the said show-cause notice and imposed penalty under Rule 173Q for improper maintenance of statutory records. From the above, we find that the proceedings initiated in the show-c .....

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ow-cause notice are different from the facts in the present show-cause notice. - demand of duty on the shortage of goods confirmed by the adjudicating authority is sustained. - As regards limitation, the present show-cause notice is issued for demand of duty on the shortage of goods noticed for the period in dispute and has no relevance with the first show-cause notice dated 14.8.2001. Therefore, appellantís reliance on the Honíble Supreme Courtís decision is not applicable to present case. .....

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se duty on the huge shortage of finished goods and imposition of equal penalty with interest is liable to be upheld. - Decided against Assessee. - E/639/2002 - Final Order No. 40777 / 2015 - Dated:- 3-7-2015 - Shri R. Periasami and Shri P. K. Choudhary, JJ. For The Appellant : Shri S. Sivathanu Mohan, Advocate For The Respondent : Shri K.P. Muralidharan, AC (AR) Per R. Periasami The appellant filed this appeal against the impugned order dated 7.10.2002 passed by the Commissioner of Central Excis .....

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nce in the stock to the tune of 8,79,372 MTs compared to RG-I Register. After completing the investigations, statements were recorded and the department issued show-cause notice dated 27.3.2002 for demanding excise duty of ₹ 1,84,19,199/- for shortage of finished goods and invoked the extended period under proviso to section 11A. The Commissioner of Central Excise confirmed the demand and imposed equal amount of penalty under section 11AC along with interest under section 11AB of the Act. .....

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Order-in-Original dated 7.1.2002 and dropped the confiscation of the seized goods as the goods were still lying in the factory premises and there was no evidence that these goods were likely to be cleared clandestinely and he imposed a penalty of ₹ 10,000/- for non-maintenance of RG-I Register. He further submits that the appellants on their own constituted a low level committee to study the reasons for shortage. When that committee failed to know the reason for shortage, a high level comm .....

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. He also submits that the expert opinion given by Textile Research Associations like ATIRA, BTRA and SITARA opined that it is technically impossible to achieve elongation beyond 3%. 5. He further submits that the entire demand is hit by limitation as the Department had already issued a show-cause notice dated 14.8.2001 and same was adjudicated by the Commissioner on the excess quantity seized and the Department again issued the present show-cause notice dated 27.3.2002 based on the same set of .....

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and the order-in-original dated 7.1.2002. He relied submissions recorded by the adjudicating authority in paras 4 to 6 at page 64 and para IX at page 69. He further submits that the shortage is due to elongation of processed fabrics whereas the adjudicating authority has discussed in his finding as shrinkage of fabrics and worked out the percentage of shrinkage which was not part of the show-cause notice. He relies on the following case laws:- (a) ECE Industries Ltd. Vs. CCE, New Delhi - 2004 ( .....

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nce of sample fabrics without payment of duty. He submits that duty is demanded under Rule 223A of Central Excise Rules, 1994. He relied on the findings at para 30 and 31. He also submits that the extended period has been rightly invoked and it is not hit by limitation. The learned AR submits that the first show-cause notice was issued for confiscation of the seized goods which was not accounted in the RG-I Register whereas the present show-cause notice was issued for demanding duty on the short .....

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60) ELT 511 (Mad.) 7. We have carefully considered the submissions of both sides and perused the records. The adjudicating authority has demanded duty on the shortage of fabrics valued at ₹ 11,55,06,712/- and confirmed demand duty of ₹ 1,84,19,199/-. The entire demand has been confirmed based on shortage of unprocessed and processed fabrics as well as made ups as worked out in the Annexures to the impugned order. The appellant s main contention is that the entire demand is hit by tim .....

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w-cause notice dated 14.8.2000 and the Order-in-Original dated 7.1.2001, we find that the said show-cause notice was issued for confiscation of the excess goods seized at their units. The adjudicating authority had decided the said show-cause notice and imposed penalty under Rule 173Q for improper maintenance of statutory records. From the above, we find that the proceedings initiated in the show-cause notice dated 14.8.2000 was entirely different and it is only related for the excess stock foun .....

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lant s contention that the demand is hit by limitation as department having issued the first show-cause notice ought not to have issued the present show-cause notice is not sustainable and liable to be rejected and the demand is not hit by limitation. 9. On the merits of the case, the appellant s contention that the huge shortage of fabrics is due to the notional elongation of fabrics recorded during the relevant period. In this regard we find that the adjudicating authority has dealt the issue .....

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extent of 1 to 1.5% from the total shortage. The appellant s reliance on the elongation of fabrics is not supported with any evidence except stating their own internal high level committee report. In this regard, we find that the Hon ble High Court of Madras in the case of Alagappa Cements Ltd. (supra) upheld the demand on shortage of stock. Para 6 of the order is reproduced below:- 6. Having heard the learned counsel for the appellant as well as the learned standing counsel for the respondents, .....

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ner in which the stock of clinkers was taken, but there was no explanation for its silence between 20th July, 1993 and 23rd July, 1993. The said observation of the original authority is quite convincing and acceptable. If really the inspecting officials did not make proper verification of the stock at the time of inspection, it is quite normal that the aggrieved assessee would have immediately objected to any such improper method of verification of stock then and there. When two of the officials .....

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nst the quantity of 232.2 metric tons disclosed in Form IV register, only shows that such irregular maintenance of stock in the appellant s manufacturing premises was a usual phenomenon. That apart, when the difference in the quantity of limestone was noted, it also showed the excess quantity of removal of limestone by the appellant. The only explanation was that such excess removal of limestone was shown to satisfy the State Government authorities or otherwise, there was every likelihood of can .....

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n a vertical shaft kiln and the clinker is manufactured. Thereafter, the clinker is mixed with gypsum and the resultant product is called Portland cement. Therefore, when the limestone is the basic raw material which is used for the manufacture of clinker and thereafter for the manufacture of Portland cement, it was incumbent upon the appellant to have satisfactorily explained the missing quantity of clinkers to an extent of 1214.579 metric tons. It is quite apparent that large quantity of limes .....

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he actual manufacture of cement not brought into accounts, then alone the conclusion of the original authority as well as the first respondent can be justified cannot be accepted. The inference drawn by the second respondent based on shortage of clinkers and the excess quantity of limestone quarried during the relevant period was sufficient enough for the authorities to conclude as to the ultimate quantity of Portland cement which could have been produced from such excess quantity, which were no .....

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