2003 (11) TMI 538 - AT - Central Excise

Commissioner's Order Overturned: Appeal Granted with Consequential Relief

The Tribunal set aside the Commissioner's order, allowing the appeal with consequential relief. The judgment emphasized the importance of a comprehensive ... Cenvat/Modvat - Accountal of raw materials Issues:Incomplete RG23A Part-I register, shortages of raw materials, excess raw materials, Modvat credit entries, duty demand, confiscation of excess raw materials, redemption fine, interest demand, penalty imposition.Analysis:1. Incomplete RG23A Part-I Register:The Central Excise officers found that the RG23A Part-I register was incomplete from 1-4-1994 to 24-4-1994 at the appellant's factory. The appellant explained that due to the absence of the dealing assistant, the register was incomplete. They maintained records of raw materials received in BIN cards and issued based on requisition slips. Despite explanations and submission of documents, the Commissioner did not consider these private records as sufficient evidence, emphasizing the importance of statutory records. However, the Tribunal found the Commissioner's reliance solely on statutory records to be arbitrary and unacceptable. The Tribunal noted that the officers should have allowed the completion of records before comparing physical balances to avoid discrepancies.2. Shortages and Excesses of Materials:The officers alleged shortages and excesses of raw materials, packing materials, and Modvat inputs, leading to duty demands and confiscation of excess materials with a redemption fine. The Commissioner's order was criticized for being cursory and arbitrary, as he disregarded evidence presented by the appellants, which showed proper accounting of materials in private records like BIN cards and issue slips. The Tribunal emphasized the need for a thorough investigation to determine the truth, pointing out that relying solely on incomplete statutory records was inadequate.3. Modvat Credit Entries:The appellants admitted to taking Modvat credit in RG23A Part-II without corresponding entries in Part-I. The Commissioner imposed penalties and demanded duty on these discrepancies. However, the Tribunal found the Commissioner's approach to be superficial, merely confirming the allegations without delving into the merits of the appellants' case. The Tribunal concluded that there was no justification for the duty demands, confiscations, or penalties imposed by the Commissioner.In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The judgment highlighted the importance of a comprehensive investigation, proper consideration of evidence, and the inadequacy of relying solely on incomplete statutory records.