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M/s. Vidyut Metallics Pvt. Ltd., Shri V.B. Poojari, Shri Hari Shankar Acharya Versus Commissioner of Central Excise, Mumbai And Vice-Versa

2017 (12) TMI 330 - CESTAT MUMBAI

Clandestine manufacture and removal - records of wastages - non-recording of actual production figures - Held that: - Though it is indeed surprising why production reports of a kind not relevant for the end product were kept, if 25% wastages were to be generated subsequent to that stage of operation. No professionally managed Company will keep records where there is no wastage, especially of steel coil, and will definitely keep records of & at wastage points to collect the data and steady reason .....

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accounted production and its clandestine removal is thus established. - The Tribunal had upheld the charges of removal of goods but remanded only on limited aspect of reworking of demand and the above findings of the Tribunal was not challenged before higher forum by the assessee - the re-quantification of demand cannot be undertaken at this stage since it involves the detail inspection of the records and documents. Further the modvat aspect for the purpose of quantification has also to be l .....

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), Shri Harishankar Acharya (Production Manager), Shri V.B. Poojari (Excise officer) as well as by the revenue against Order dt. 30.11.2005 passed by the Commissioner of the Central Excise , Mumbai III. M/s VML has filed appeal against confirmation of demand/penalties and Shri Harishankar and Shri Poojari have filed appeals against penalty imposed. The revenue has filed appeal against dropping of demand against M/s VML and for enhancing penalty ordered by the adjudicating authority against V.B. .....

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. During the course of preventive check a tempo loaded with CRSS strips was found standing inside the factory. On enquiry it was found that there was two central excise invoice bearings same serial number in respect of aforesaid strips. The said goods were therefore seized. Further enquiry revealed that M/s VML II had cleared CRSS Strips of 0.1mm and other machinery parts valued at ₹ 1,13,53,482/- during the period Dec 94 to Jan 97 by issuing two set of invoice bearing same serial numbers .....

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alleged excess unaccounted production of CRSS Strips as above for the period Mar 96 to Mar 97 ; demand of duty of ₹ 17,03,031/- on alleged excess clearance by way of issue of two sets of invoices bearing same serial numbers for the period Dec 94 to Dec 96; demand of duty of ₹ 26,42,491/- on account of undervaluation of goods. Further penalties was also proposed to be imposed upon M/s VML II and other co-appellants. The demands were confirmed by the adjudicating authority vide Order d .....

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d clearance. The benefit for the period Oct 96 to Dec 96 for the overlap should go to the assessee and the demand has to be thus reworked out. The Tribunal remitted the matter back for the said purpose and also held that in view of findings the penalty has to be re-determined and the question of valuation was kept opened. The adjudicating authority vide order dt.23.11.2005 confirmed demand of ₹ 17,87,850/- on the excess and unaccounted production of CRSS of 0.1mm thereby reducing it from 1 .....

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y M/s VML and individuals. The Revenue aggrieved with the dropping of demands and reduction of penalties of individuals has also filed appeals before the Tribunal. 3. Shri Mihir Mehta, Ld. Counsel appearing for M/s VML and individuals submits that it is not in dispute that VML II has transferred the entire finished goods to VML I or its associate concerns viz Micro Raj Electronics Pvt. Ltd. and R.C.C. (Sales) Pvt. Ltd both located in Hyderabad on payment of duty who avail modvat credit of the sa .....

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be alleged. He submits that since whole situation of paying duty and availing credit by the jobworker and VML I is revenue neutral and there is no justification or motivation for the assessee to remove goods clandestinely thus the demand for the extended period is not sustainable. He relies upon the order of Hon ble Apex Court in case of NIRLON LTD. Vs. CCE, MUMBAI 2015 (302) ELT 22 in support of his contention. He further argues on merits and factual aspects to show that there has been no remov .....

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aken into consideration the 19 number of invoices and in absence of any ground for non consideration of the clearances made on said invoices the non confirmation of demand on such invoices is not legal. That the adjudicating authority allowed modvat credit on inputs for the year 1994 95, 1995 96 and 1996 97 and arrived at assessable value for the respective years and finding the same to be less than the assessable value taken by the assessee for payment of duty has dropped the demand. However th .....

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t availed. Therefore in absence of correct value the dropping of demand to the extent of said product is not proper. 5. We have carefully considered the submission made by both sides. As far as aseessee contention of revenue neutrality and merits of the case is concerned we find that the Tribunal in its order dt.30.07.2004 had remanded the matter back with the limited issue holding as under : The demand of ₹ 19,95,483/- for the period October 96 to March 97 is confirmed on unaccounted prod .....

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e which resulted in mismatch between the excess production of this machine and slitting and coil forming machine. The Commissioner has considered this submission and concluded. I find that the above contention of M/s VML is without grounds. For moment, it is assumed that the above consideration is correct then the basis is that why no production reports/ slips were prepared and retained showing the quantity obtained during the date or in a shift from slitting and coil joining machines or after t .....

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were kept, if 25% wastages were to be generated subsequent to that stage of operation. No professionally managed Company will keep records where there is no wastage, especially of steel coil, and will definitely keep records of & at wastage points to collect the data and steady reason and reduce such wastage. The admission of the officers of the assessee that dispatch figures were recorded and not actual product figures in the RG 1, as relied upon by the Commissioner itself leads to the esta .....

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377; 17,03,031/- in respect of Clandestine removal during December 1994 to December 1996 and ₹ 24,42,941/- on unaccounted production and removal as per Part (II) during the period October 1996 to March 1997 shows an overlap. Whatever has been unrecorded production has to be unaccounted clearance. The benefit for the period October 1996 to December 1996 for the overlap has to go to the assessee. For the purpose, the demands will have to be reworked out. The matter is required to be remitted .....

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