2004 (2) TMI 243 - AT - Central Excise

Tribunal upholds denial of credit for shortage of imported inputs, reduces penalty. Weighments crucial.

The Appellate Tribunal CESTAT, Mumbai, upheld the lower authorities' decision to deny credit for the quantity not received in the factory due to a ... Demand and penalty Issues: Dispute over shortage of receipt of imported inputs, demand for duty payment on short receipt, imposition of penalties under Rule 57(ii)(4) and Section 11AC, appeal against lower authorities' orders.In this judgment by the Appellate Tribunal CESTAT, Mumbai, the dispute centered around the shortage of receipt of imported inputs in the factory of the appellants. The discrepancy between the quantity indicated in the import documents and the actual quantity received, as determined through weighment on the factory's weigh bridge, led to the identification of a quantitative differential, i.e., short receipt of inputs. Consequently, the lower authorities demanded duty payment on the quantities received short and imposed penalties under Rule 57(ii)(4) and Section 11AC, with a separate penalty imposed on the manager.The appeals, one from the company and the other from the Deputy General Manager (Works), challenged the orders of the lower authorities. The appellants contended that the differences in quantity between the import documents and the weighments at the factory were due to calibration variations at the port and in the factory, along with temperature differences affecting petroleum oil products. However, the tribunal dismissed these arguments, emphasizing that weighments determine the quantities, and temperature fluctuations do not justify such differences. As the credit was claimed based on the full quantity in the import documents, denial of credit for the quantity not received in the factory was deemed appropriate. Consequently, the tribunal upheld the lower authorities' decision to deny credit, rejecting the appellants' appeal on this aspect. Nevertheless, the tribunal found no justification for imposing a penalty equivalent to the confirmed duty amount.In light of the case's circumstances, the tribunal reduced the penalty under Section 11AC from Rs. 4,69,077 to Rs. 50,000 and set aside the penalty imposed on Shri Satish Talwar. Apart from these modifications, the tribunal confirmed the impugned order-in-appeal, partially allowing the appellants' appeals in the specified terms.