2015 (2) TMI 471 - AT - Central Excise

Assessee's Appeals Allowed, Revenue's Dismissed: Penalties on Director for CENVAT Credit Variances Reconsidered

The appeals filed by the assessee were allowed, directing the adjudicating authority to reconsider the penalty imposed on the director for CENVAT credit ... Clandestine removal of goods - Shortage of goods found - Captive consumption - After withdrawal of Compounded Levy Scheme assessee cleared goods without payment of duty - CENVAT credit involved in less quantity of inputs received and comparison of quantity mentioned in Form IV register vis-`-vis Purchase Ledger is not matching - Held that:- After physical verification of stock, it was found that the assessee has taken excess credit of ₹ 2516/- only and the same has not been contested by the assessees. In these circumstances, the learned Commissioner (Appeals) has rightly set aside the penalty as the adjudicating authority has not alleged against the assessees that these shortages of silicon manganese is due to fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules with intent to evade payment of duty. Therefore, the learned Commissioner (Appeals) has rightly dropped the penalty. Accordingly, the order quo dropping the penalty on shortage of silicon manganese is upheld. Difference of weighment slip is only 0.05% which is negligible in this trade. Further there may differences in weightment on various balances. In these circumstances, I do agree with the findings of the Commissioner (Appeals). Therefore, I upheld the order of the Commissioner (Appeals) on this issue. Court has verified the invoices produced by the assessees which were also produced before the lower authorities. These invoices shows that these Runners and Raisers are excisable goods which emerges during the process of manufacturing of their final product i.e. M.S. Ingots. Therefore, they are not liable to pay duty as they have raised Central Excise invoices in their own name as the assessee is entitled for the benefit of Notification 67/1995 and is not required to pay duty thereon. In contrary to that the Revenue has failed to produce any evidence that these Runners and Raisers have been cleared without payment of duty outside their factory. As there is an evidence produced by the assessee that the central excise invoices were issued in their own name and have been captively consumed for manufacturing of final product. In these circumstance, I set aside the impugned order quo demand of ₹ 30,95,597/-. As the demand is not sustainable, therefore, penalty is also not sustainable. With regard to the demand of duty on the quantity of 87.86 MTs of M.S. Ingots, the learned Commissioner (Appeals) has verified the fact on the basis of evidence produced by the assessee such as RG I register which shows that the assessee has paid duty on these M.S. Ingots when the compounded levy scheme was applicable. Therefore, the duty cannot be demanded twice on the same goods. Therefore, I do agree with the order of Commissioner (Appeals) on this issue and the same is upheld. With regard to the comparison of quantity of CENVAT credit shown in the form IV Register and purchase ledger, the learned Commissioner (Appeals) has not considered the reconciliation statement produced merely on the ground that the same is not signed. In these circumstances, I set aside the order confirming the demand of ₹ 4,32,575/- as the assessee has produced reconciliation statement which may be verified on production of various records (on basis of which the reconciliation statement is prepared by the adjudicating authority. Therefore, it would be in the interest of justice to remand the matter back to the adjudicating authority on this issue only for verification purpose whether the variance of Cenvat Credit in Form IV Register and purchase ledger are correct or not? The assessees are also directed to produce the authenticated copy certified by a Chartered Accountant to that effect and the same is to be considered by the adjudicating authority. - Appeal disposed of. Issues Involved:1. Duty demand and penalty confirmation against the assessee and its director.2. Appeal by Revenue against dropped demands and penalties.3. Discrepancies found during investigation: shortage of input, excess quantity of finished goods, captively consumed runners and raisers, duty on cleared goods, CENVAT credit variance.4. Adjudication process, appeals, and penalties imposed or dropped.5. Arguments presented by both sides regarding the demands and penalties.6. Five main issues addressed separately in the judgment.Analysis:1. Duty Demand and Penalty Confirmation:The judgment deals with appeals by the assessee and its director against the duty demand and penalty confirmed in the impugned order. The Revenue also appeals against dropped demands and penalties. Various discrepancies were found during the investigation, including shortages of inputs, excess finished goods, captively consumed goods, duty on cleared goods, and CENVAT credit variances.2. Discrepancies Found During Investigation:The investigation highlighted several discrepancies, such as shortages of input material, excess quantity of finished goods cleared, captively consumed runners and raisers, duty on cleared goods, and CENVAT credit variances. The assessee was accused of not paying duty on cleared goods and discrepancies in CENVAT credit calculations.3. Adjudication Process and Penalties Imposed or Dropped:The impugned proceedings were initiated against the assessee based on the discrepancies found during the investigation. The adjudicating authority confirmed duties and penalties, which were appealed by both parties. The Commissioner (Appeals) confirmed some demands but dropped penalties in certain cases, leading to further appeals.4. Arguments Presented by Both Sides:The counsels for the assessee argued against the demands and penalties, citing reasons such as negligible amounts, discrepancies in weighment slips, and captively consumed goods. The Revenue's counsel argued for the imposition of penalties based on the discrepancies found during the investigation.5. Five Main Issues Addressed Separately:The judgment addresses five main issues separately, including CENVAT credit on shortages, excess finished goods demand, captively consumed goods, duty on cleared goods, and CENVAT credit variances. Each issue was analyzed based on evidence and legal provisions to determine the validity of demands and penalties.In conclusion, the appeals filed by the assessee against the impugned order were allowed, with the adjudicating authority directed to reconsider the penalty imposed on the director regarding CENVAT credit variances. The appeal filed by the Revenue was dismissed. The judgment comprehensively analyzed each issue raised, providing detailed reasoning and legal interpretation for the decisions made.