TMI Blog2023 (12) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... is not sustainable. Accordingly, the demand confirmed in the impugned order on this count is liable to be set aside. Confirmation of duty demand of Rs.22,99,672/- including Education Cess and SHE Cess, relating to clandestinely cleared goods not accounted for in physical stock verification - HELD THAT:- On going through the reconciliation statement submitted by the Appellant, the net shortage of 36.13 MT arrived at by the Appellant is satisfied. Accordingly, the Appellant is liable to pay duty of Rs. 3,02,176/- along with interest on the shortage of 36.13 MT, as worked out by them. Confirmation of duty demand of Rs. 1,50,540/- relating to under valuation of stock transferred goods - HELD THAT:- The Appellant has not disputed this liability. Accordingly, the confirmation of this demand is upheld. Levy of penalty of Rs.85,74,214/- on the Appellant under Section 11AC, of the Central Excise Act, 1944 - HELD THAT:- The duty of Rs. 3,02,176/- along with interest has been confirmed on the shortage of 36.13 MT, which the Appellant agrees to pay. It is observed that this shortage has been arrived at by taking the yield of UF Resin Powder produced as 55% of the weight of liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Tariff Act, 1985 at its factory at Rampur, West Bengal. The Appellant set up its manufacturing facilities in June, 2007 adjoining the factory of its sister concern, Allied Resins and Chemicals Limited (hereinafter referred to as Allied Resins ), which manufactured the liquid resin used by the Appellant to manufacture the resin powder. The liquid resin required by the Appellant for the manufacture of resin powder was purchased by it from Allied Resins. Allied Resins supplied the liquid resin through pipeline directly from its factory to the Appellant s factory. The Appellant obtained central excise registration on November 5, 2007 and started production from December 2007. Prior to the Appellant obtaining central excise registration and also thereafter, Allied Resins used the Appellant s manufacturing facilities to manufacture resin powder from liquid resin manufactured by it in its adjoining factory. Allied Resins duly accounted for the resin powder so manufactured in its central excise records and paid duty thereon. 3. On May 5, 2008, central excise officers conducted stock verification at the Appellant s factory. In course of such verification, the officers foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the duty demand of Rs.61,24,002/- including Education Cess and SHE Cess, relating to unaccounted manufacture and clearance of U F Resin Powder, to Rampur Unit of Allied Resins. (ii) confirmed the duty demand of Rs.22,99,672/- including Education Cess and SHE Cess, relating to clandestinely cleared goods not accounted for in physical stock verification. (iii) Confirmed duty demand of Rs. 1,50,540/- relating to under valuation of stock transferred goods. (iv) Imposed penalty of Rs.85,74,214/- on the Appellant under Section 11AC, of the Central Excise Act, 1944. (v) Imposed penalty of Rs.1,00,000/- on Shri. R K Vijay, CEO under rule 26 Of Central Excise Rules, 2002 read with Section 9(1) of the Central Excise Act, 1944. 6. In their grounds of appeal, the Appellant made the following submissions: (i) Issue No. (i) : Demand of Rs. 61,24,002/- The Appellant submits that the Commissioner erred in confirming the demand of duty of Rs. 61,24,002/- in respect of resin powder manufactured by Allied Resins by using the Appellant s manufacturing facilities and its own facilities and duly accounted for by Allied Resins in its central excise records and returns. Allied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable =3,02,176 Accordingly, the Appellant submits that they are ready to pay the Duty amounting to Rs. 3,02,176 along with interest for the shortage of 36.13 MT. (iii) Regarding the confirmed demand of duty Rs. 1,50,540/- relating to under valuation of stock transferred goods, the Appellant has not disputed this liability. (iv) The Appellant further submits that under the facts and circumstances of the instant case, the extended period of limitation cannot be invoked in this case. When there is no liability of duty, no interest is chargeable under the Act. Also, the question of imposition of penalty under section 11AC does not arise. (v) In the impugned order, a personal penalty of Rs. 1,00,000/- has been imposed upon the Appellant No. 2 under Rule 26 of the said Rules read with Section 9(1) of the Act. In the show cause notice proposal was made for imposition of personal penalty on R. K. Vijay, CEO of the Appellant, under section 9(1) of the Act for his alleged involvement in abetting the commission of alleged evasion by the Appellant. As the alleged offence has not been substantiated with evidence, the question of imposing penalty does not arise. However, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is ignorable. As per the reconciliation statement submitted by the Appellant the actual short, which is reproduced below, the shoratge was only 36.13 MT. Working Notes M1 M2 Total Liquid produced Liquid produced during 01.06.2007-05.05-2008 10970.315 2658.435 13628.75* * Out of the total liquid a part is used for captive consumption by Allied Resins in Rampur, a part is transferred to Aarem facility in Rampur and a part is transferred to Hide Road facility Transfer of liquid Aarem facility at Rampur (As per Excise Dept) Allied facility (Captive Consumption) [As per books] Total Liquid transferred to Rampur 2106.315 1862.2 3967.515 Total Powder should have been produced 3967.515 * 55% 2182.13 MT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act, we observe that allegation of suppression with intent to evade payment of duty has not been substantiated in this case. Also, the department has not brought in any evidence to highlight the role of Appellant No.2 in the commission of the alleged offence. Accordingly, we hold that the penalty imposed on him under rule 26 read with section 9(1) of the Central excise act, is not sustainable. 15. In view of the above discussion, we pass the following order: (i) The demand of duty Rs.61,24,002/-confirmed in the impugned order is set aside. (ii) The demand of duty of Rs. 22,32,691/- confirmed in the impugned order is reduced to Rs. of Rs. 3,02,176 for the shortage of 36.13 MT. The Appellant is liable to pay this duty along with interest. (iii) With respect to the demand of duty Rs. 1,50,540/- relating to under valuation of stock transferred goods, the Appellant has not disputed this liability. Accordingly, we uphold the confirmation of this demand. (iv) The penalty imposed on the Appellant 1 and Appellant 2 are set aside. (v) The impugned order is modified as above and the appeals are disposed on the above terms. ( Operative part of the order was pron ..... X X X X Extracts X X X X X X X X Extracts X X X X
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