TaxTMI 
TaxTMI 
2014 (10) TMI 680
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....annealing plant to soften the material and the annealed strips are passed in Pinch Pass Mill where a very minor reduction is given to impart hardness on the surface of these strips. These strips after being slitted to the required size are tested for quality control and if there is no defect, the same are accounted for in the RG-1 register. 1.2 On 30th November 2000, the appellant's factory was visited by the Jurisdictional Central Excise officers and they checked the stock of the finished goods as well as raw material. While there was shortage of 1145.35 M.T. of HR Coils in respect of which Cenvat credit had been taken, there was shortage, vis-`-vis the balance in RG-1 register of 570.833 M.T. of CRCA Strips, 4.296 M.T. of CR/HR Scrap and 42.425 M.T. of Silicon Electrical Grade Steel. At that time inquiry was made about the shortage with Shri Yashpal Sharma, Marketing Executive, Shri B.N. Jha, Manager Production (Planning) and Shri Pradeep Sharma, Accountant, but they could not give any reason for shortage. 1.3 The appellant under their letter dated 01/03/01 to the Superintendent, Central Excise, explained the shortage. With regard to the alleged shortage 570.833 M.T. of CRCA St....
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....utting machine was also installed, the appellant's claim that 1106.34 M.T. of HR Coils were stored at those premises during November 2000 appeared to be highly doubtful. It was also found that there was facility of cutting of de-coiling and cutting of HR Coils in the factory of the appellant and for this reason also the appellants claim regarding sending of 1106.34 M.T. of HR Coils to M/s HSC for de-coiling and cutting appeared to be doubtful. It, therefore, appeared that the cenvated HR Coils found short had not been sent to M/s HSC for slitting but had been removed clandestinely without payment of duty. With regarding to balance quantity of about 39 M.T. of HR Coils, it was explained that the same had been used in the appellant's factory for manufacture of CR Sheets but this claim did not apparent be backed by any records. 1.4 The appellant's explanation with regard to the shortage of finished goods also did not appear to be satisfactory and it appeared that the finished goods found short had been removed clandestinely without payment of duty. 1.5 In course of search of the appellants factory some parallel invoices were also recovered which indicated the clearance of 210.63 M....
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....emanded the matter to the Commissioner for denovo adjudication after considering the appellant's plea that the conversion of HR Coils into CR Coils/ Sheets/Strips does not amount to manufacture and hence no duty would be chargeable. The Tribunal also directed that after deciding this issue, other issues regarding shortage of cenvated raw material and shortage of finished products may also be examined. 1.10 The matter was adjudicated denovo by the Commissioner vide order-in-original dated 13/05/04 by which the Commissioner again confirmed the duty/Cenvat credit demand of Rs. 50,16,836/- against the appellant company alongwith interest on it under Section 11AB and beside this, penalty of equal amount was imposed on them under Rule 173Q (1) readwith Rule 57AH (2) of Central Excise Rules, 1944. In Denovo adjudication order the Commissioner examined the appellants plea that conversion of HR Coils into CR Coils/CR Strips/Sheets does not amount to manufacture and held that this process results in emergence of new product having distinct name, character and uses and hence the same amounts to manufacture. Against this order of the Commissioner, this appeal has been filed. 2. Heard both t....
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....ld have easily verified the original invoices by conducting inquiries with the customers mentioned therein or with the owners/drivers of the trucks whose registration number appear on the same, but the show cause notice is silent about any such inquiry, that as regards allegation of clandestine clearance of 121.77 M.T. of CR Strips under 8 bills of bearing No. 1412 dated 28/11/2000, but issued to different parties, these bills do not represent the actual invoices and there were no clearances under the same, as the same had been generated by the software engineer while carrying out repairs of the computer, that as regards allegation of clandestine removal of 22.22 M.T. of CR Strips under duplicate set of invoices No. 343 dated 28/05/2000, 927 dated 05/09/2000 and 1052 dated 20/09/2000, except for the name of the customers all the details of the two sets of the invoices are same, that in these cases the customers had asked the appellant to change the consignees name at the last moment and for this reason only, fresh invoices had been prepared and as such these are not the cases where under the same invoices, the goods had been cleared to two sets of customers, that as regards the al....
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.... 623/2003-NB dated 21/08/03. Though this point was not argued in course of hearing, in the memorandum of appeal this point has been raised in the ground of appeal and, therefore, in our view, it is necessary to deal with the same. 6.1 The appellant purchased HR Coils which after un-coiling and slitting are subjected to the process of pickling by treating the same with hydrochloric acid or sulphuric acid to remove the oxide layer from the surface. After this process the strips are subjected to cold rolling in the cold rolling mill to the desired thickness. The cold rolled strips are annealed in the annealing plant to soften the material. The annealing is done in the protective atmosphere of nitrogen gas to protect the steel strips for getting oxidized. After annealing, the strips are processes in Pinch Pass Mill where a very small reduction is given to import hardness on the surface of the strip. Thereafter the strips are slitted to the required size and after quality control inspection, if no defects are found, the same are entered in the RG-1 register. The uses of hot rolled steel sheets/strips and cold rolled steel sheets/strips are different. In the Central Excise Tariff as wel....
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....o manufacture. In view of this, we uphold the Commissioner's finding on this point. 7. Coming to the alleged shortage of 1145.35 M.T. of HR Coils, there is no dispute about the fact that at the time of officers' visit to the factory, while there was entry in the RG-23A register regarding the receipt of this quantity of HR Coils and the Cenvat credit in respect of the same had also been availed, this quantity of the coils could not be found in the factory. Subsequently, the appellant explained that out of this quantity a quantity of 1106.34 M.T. had been sent to M/s HSC, Ghaziabad for slitting on job work basis and this fact is confirmed by M/s HSC and the remaining quantity was in process in the factory. However, from the correspondence between the appellant and M/s HSC it is also seen that in December 2000, the appellant had asked M/s HSC to return the quantity without any job work and according to the appellant, the coils in respect of which the Cenvat credit had been taken, have been sold on payment of duty under the invoices issued under Rule 57AB. The Commissioner while confirming the demand on the entire quantity of 1145.35 M.T. of HR Coils had not considered, the appellant....
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....oth these pleas are difficult to believe. As per the appellant's own admission, the entry in RG-1 register is made only after their inspection by the quality control department and only when the finished goods they pass the quality control test, their quantity is entered in the RG-1 register. If the some quantity of CR Strips has been manufactured as per some specifications given by the customers, at the time of quality control checks the goods would be examined with regard to the customer's specifications and if the goods are not according to the customer's specifications the same would not be entered in the RG-1 register. The appellant's plea of reissue of the finished CR Strips for reprocessing after their checking by the quality control and entry of the RG-1 register is difficult to believe. Moreover if such a huge quantity of CR Strips which was found missing, was actually lying in the factory, the appellant would have brought the same to the notice of the Central Excise officers on the very next day, but they came up with this explanation after a long gap of time. Similarly, if the 4.296 M.T. of CR Coils was actually available in the factory, they would have brought this fact....