TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 184
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntral Excise, Udaipur adjudicated upon the show cause notice dated 02.05.2018 issued to the respondent and dropped the entire proceedings against the respondent. The factual matrix which led to the issue of the show cause notice which culminated in the impugned order is as follows. The respondent is a manufacturer of cement and clinker and holds Central Excise registration for the purpose and they had been paying central excise duty. Their records were audited by the Accountant General Audit for the period 2011-2012 to 2015-2016 and it was noticed that the respondent had conducted an internal physical verification of the stock on 29.12.2015 which revealed a shortage of 240761 M.T. of limestone which is a raw material for the respondent and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7300 1 mtr. Height for dead stock material (filed inside pile to make proper bed) 2. Material handling from stacker to yard and return 2014-15 2200 Material stacked outside pile for mitigation of emergency situations like monsoon etc. 0.5 mtr. Dead stock (not extractable) as material stacked on barren land (soil) 3. Material used for filling road, approach inside plant and 99C to security post 2013 24400 Material used for making approaches for dumpers movement from AJ mines road to plant (3.00 km & upto 0.5 mtr. level filling) 4. Mines road backfilling 2014 21800 Backfilling of 1 km long x 15 mtr. x 1 mtr level filling wide road for movement of dumpers carrying limestone inside mines. 5. Crusher ramp fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice dated 02.05.2018 was issued to the respondent. The learned Commissioner had, in the impugned order, accepted the explanation by the respondent and held that he did not find any reason to presume that the shortage in raw material had resulted in clandestine production and clearance of clinker and therefore dropped the proceedings under the show cause notice. Since the demand was dropped, there was no ground to impose any penalty upon the respondent. This order was reviewed by the Committee of Chief Commissioners. They were of the opinion that the order was not legal and proper on the following grounds :- "(i) physical verification of the stock of limestone and clinker was carried out by independent agency and the shortage was ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut considering the fact that the reasons for shortage of Limestone, as advanced by the assessee at a later stage, were not explained to the Internal Physical Verification Agency or to the A.G. Audit and, therefore, the same are nothing but an afterthought. (b) Whether the Commissioner has erred in dropping the demand without considering the fact that the Internal Physical Verification Report indicating, shortage of 32,051 M.T.s clinker and 2,40,761 M.T.s Limestone has been accepted by the assessee and duty has been paid by them in respect of quantity of Clinker found short which proves that the assessee have indulged in clandestine clearance of Clinker. (c) Whether the Commissioner has erred in dropping, the demand without considering t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act "there shall be levied and collected in such manner as may be prescribed, a duty of excise to be called Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in SEZ) which are produced and manufactured in India as, and at the rates set-forth in the first Schedule to the Central Excise Tariff Act, 1985". Therefore, for central excise duty to be levied; (a) there must be an excisable good ; (b) such excisable good must be manufactured or produced ; (c) the manufactured good must be leviable to duty as per the Central Excise Tariff. 9. There is no provision in the Central Excise Act to charge central excise duty on the basis of presumption of manufacture or production. If there is no pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eflected in their records or in the returns which they filed with the mines. We observe that if these were indeed recorded in their books of accounts and reflected in their returns then there will be no shortage. The shortage was discovered when they conducted physical verification of the stock which did not match the accounts. Had the shortages been reflected in the accounts and in their returns then there would not be any shortage at all. 10. Regarding shortage of limestone, the respondent gave an explanation. We find no reason to disbelieve the respondent. If they had used the limestone for construction somewhere and not properly accounted for such usage in their books of accounts stock taking will show a shortage. It is not for the res....