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TMI Blog2017 (3) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... verification at the premises of the main appellant. Thereafter, proceedings were initiated against the appellants for - (a) confiscation of seized WIP (Work in progress) materials found in excess, along with imposition of penalty and (b) denial of cenvat credit on raw materials found short; demand of duty on scrap found short; wrong availment of credit on input services used for civil construction; demand of duty on M.S. Plates cleared without reversal of credit along with imposition of penalty. 3. The issue relating to confiscation of WIP materials was decided by the Original Authority and confirmed by the Commissioner (Appeals) vide his order dated 31.03.2011. Two appeals are filed against this order. On the other issues relating to irregular cenvat credit and shortage of excisable items, the adjudication was done by the Commissioner vide his order dated 30.01.2012. He disallowed the cenvat credit of Rs. 52,27,512/- and confirmed duty demand of Rs. 3,25,218/-.He imposed penalties on the main appellant as well as the Director of the main appellant. Two appeals are filed against this impugned order. 4. Ld. Counsel for the appellant submitted that on the issue of confiscation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, there will be a rolling deviation, which is permitted by IS Code 1852-1985. When the weighment is made on sectional basis, comparison of total of such waste for backward calculation to find out the correctness of stock is likely to be at variation. Even the show cause notice admits that a variation of 2.5% can be considered. In fact, there are some customers, who allow upto 5% tolerance of rolling margin in their final products. More than 500 Mt. of shortage can be attributed on such deviation in weight calculation. 7. Ld. Counsel also submitted that some margin of difference is also attributable to samplings such as paints and welding electrodes. About 47 Mts. has to be adjusted on the alleged shortage of steel items. If all the calculations are considered, the net shortage, if at all, will be around 46 M.T. only. Considering that no physical stock taking has been taken since the inception of unit four years back and they have utilized as total input of more than 20,416 Mt. such alleged shortage will be only 0.23%. In the type of operation, as undertaken by the appellant, such margin, in steel items cannot be considered as shortage due to clandestine manufacture and clearan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ts. Rule 25 of Central Excise Rules, 2002 provides for confiscation of excisable good only. The lower authorities confiscated WIP materials without giving a clear finding whether these are excisable items and if so, under what tariff heading. By its very description, work- in-progress is apparently goods in process and the degree of progress in final manufacture varies. We note that due consideration has to be given to the nature of appellant's activity and the goods involved in their fabrication work. The lower authorities proceeded with the simple arithmetic calculation starting from opening balance, quantum of inputs received, quantum of dispatches, scrap declared, to arrive at the quantum of WIP that should be available. Admittedly, no physical verification of stock was done during the past 4 years in the appellant's premises. We also note that the officers recorded shortage of 315 Mts. of scrap. As already noted, in the operation of a kind undertaken by the appellant, the emergence of M.S. scrap is continuous and the identity of an item as a scrap or as M.S. items further usable, has to be considered before arriving at the conclusion of excess in WIP or shortage in scrap. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en considered at all by the lower authority. Even no margin was allowed for the consumables, which become part of the finished goods while arriving at the alleged shortage of credit taken items. We find that the appellant's claim on all these grounds has both logical and documentary support. Considering all these and applying the figures for arriving at the variation in weight, it is apparent that the shortage will be less than 1% of the total input items procured and used by the appellants. Relying on the decision of the Hon'ble Supreme Court in Maruti Suzuki India Ltd. - 2015 (319) ELT 549 (SC), we find no justification for confirmation of any denial of credit on the alleged shortage of duty paid inputs. Here, we also note that there is no corroborative evidence of any diversion or clearance of credit availed inputs. The whole exercise of the Revenue is based on the arithmetical calculation and stock taking undertaken in the premises of the appellant. No consideration was given to the nature of industry and actual process of manufacture, accounting and clearance of various items by the appellant. To sustain demand of duty on the basis of alleged clandestine removal or to deny cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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