TMI Blog2020 (12) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... ing itself as it was not done in the presence of any panchas and no panchnama was drawn? - HELD THAT:- The appellants have been saying right from the investigation stage itself that the shortages were because of minor weighment errors which had accumulated over the years since no stocktaking had been done right from the date of production of those items. The shortage, when compared to the total production over the years, comes to a very nominal percentage as indicated in para 6.3 above. This has not been contested by the department. Such nominal percentage differences are to be expected while weighing, keeping the nature of the products in mind which are not amenable to precise weighment - the shortages noticed are not actual but only notional and, hence, no differential duty is payable. DI pipes - appellant s consistent stand has been that the shortages were because of damaged pipes which were reissued for re-melting in the factory itself but inadvertently not reduced from the recorded stock of DI Pipes - HELD THAT:- These damaged pipes were all recorded in the Daily Stock Account of Scrap and also reflected in the ER-1 returns. Further, since these were captively consumed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estinely removed by the Appellants. 3. The department was also of the view that Notification No. 67/95CE dated 16-03-1995 was not applicable to the Appellants since it applied only to inputs which are captively consumed and not to finished goods as was the case of the appellants. 4. The department issued the show cause notice dated 15-09-2016 demanding Central Excise duty of ₹ 2,81,41,208/- along with interest. Penalties were proposed both against the company as well as their Managing Director, Shri Aditya Jajodia. 5. Demand was confirmed against the appellants by the adjudicating authority vide Order-in-Original No. DGR-EXCUS-COM-000-028-16-17 DT. 01-03-2017/02-05-2017. Equivalent penalty was imposed on the Company and a penalty of ₹ 10 lakhs on Sh. Aditya Jadodia, Director . The appellants are in appeal before us against this Order of the adjudicating authority. 6. Following submissions have been made by the appellants :- 6.1 The department had presumed that the quantity of finished goods which was found short had been clandestinely cleared by the Appellants. It is now established law that clandestine clearance can be proved only on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compares the shortages noticed at the time of stock taking with the quantity produced over the years the percentage difference comes to a miniscule amount as indicated in the table below: S. No: Descripti on of finished goods Quantity found physically in December , 2012 Stock as per DSA/ stock ledger Quantity produced from 1.4.2008 to 31.12.2012 Quantity found short at the time of stock taking Perce ntage on the basis of colum n (4) Perce ntage on the basis of colum n (5) (1) (2) (3) (4) (5) (6) (7) (8) 1 Ductile Iron pipes (D I Pipes) 85859.5 Mtrs 146085 Mtrs 47,57,070. 5 Mtrs (from 1.8.2010) 60225.5 Mtrs 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handling, were remelted in the factory and this was duly reflected in the RG1/DSA as well as in ER-1 returns. A perusal of Annexure-H of the show cause notice will show that the Appellants had informed the department in June, 2016, itself about the quantity of DI Pipes recycled and that these were reflected in the DI scrap Account and shown in monthly ER-1 returns but were, inadvertently, not reduced in the DI Pipe stock account. Hence, there was no actual shortage in respect of DI Pipes and that it was only an accounting/recording error. These factual submissions have not been countered and denied by the Adjudicating Authority. 6.8 The rejected DI Pipes which were recycled in the factory of the Appellants were eligible for exemption under Notification No. 67/95-CE dated 16-03-1995 as these items had been captively consumed in the manufacture of dutiable finished goods. The Adjudicating Authority has erroneously held that this notification applies only to inputs and not to finished goods . In this regard, attention is invited to the wordings of the above Notification . The word input includes all goods covered in the First Schedule to the Central Excise Tariff Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as categorically held that the Appellants were properly complying with Rule 6 of the Cenvat Credit Rules, 2004, by proportionately reversing the Cenvat credit on inputs attributable to DI Pipes cleared without payment of duty during the relevant period. 6.11 Shri Aditya Jajodia, being the MD, was not associated with dayto-day functions of the unit. There is no indication of his involvement. Hence, no penalty could be imposed on him. 6.12 The demand is time barred as the show cause notice has been issued on 15.09.2016 for the alleged clearances in 2012. There is no ground for alleging any deliberate mis-statement or suppression of facts to invoke the extended period. At best it is a case of improper maintenance of records and not a case of clandestine clearance. Further, the unit had been subjected to EA-2000 Audit in March 2012 and no discrepancy in records was found. 7. The learned AR reiterated the findings of the adjudication order and submitted that the appellants had not been able to give any satisfactory explanation for the shortages and, therefore, the allegations in the show cause notice have been rightly upheld by the adjudicating authority. 8. Heard bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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