TaxTMI 
TaxTMI 
TaxTMI 
1985 (1) TMI 70
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....4.089 Metric Tonnes of Hot Rolled Strips when the raw material Register in Form 4, which was written upto 18th January, 1981, showed a closing balance of 15.960 Metric Tonnes of duty paid Cold Rolled Strips. Consequently, the appellants were asked to show cause why : (i) the seized 11.333 Mts. of Cold Rolled Strips should not be confiscated under Rule 173Q of the Central Excise Rules, 1944, (ii) 84.089 Mts. of Hot Rolled Strips/Skelps be not confiscated under Rule 56A(4), 210 and 9(2) of the Central Excise Rules, 1944, (iii) duty amounting to Rs. 32,874.27 (Rs. 29,885.77 BED and Rs. 2,988.57 SED) on 45.978 Mts. of Cold Rolled Strips, found short, should not be demanded from them under Rule 9(2) of the said Central Excise Rules, (iv) Rs. 19,75,310.60, availed as set off, should not be demanded from them under the provisions of Rule 56A(5) ibid, (v) Rs. 3,32,678.75 availed as proforma credit should not be recovered from them under the provisions of Rule 10 and 56A(5) of the Central Excise Rules, 1944, (vi) the balance amount of credit amounting to Rs. 77,746.27 should not be disallowed under Rule 56A(5) and penal action should not be taken against them under the provisions of ....
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....ibed as Cold Rolled Strips in the raw material account. Also proforma credit in RG 23 had been fraudulently taken at a higher rate by mis-declaring the Hot Rolled Strips as Cold Rolled Strips. In view of this, the Collector rightly held that the aforesaid 75.394 Mts. of Cold Rolled Strips were liable for confiscation and the appellants were liable for penal action under Rule 173-Q of the Central Excise Rules, 1944. Further, Shri Raghavan Iyer stated that there was an admitted shortage of 45.978 Mts. of Cold Rolled Strips when the book balance was compared with the actual stock found on physical verification on 21st January, 1981 (excluding the production of 19th and 20th January, 1981, weighing 11.333 Mts.). The Collector came to the finding that the shortage of 45.978 Mts. against the book balance of 60.981 Mts. was not marked that it could be detected by eye estimation and the deficiency should have been brought to the notice of the Central Excise Authority if there were any bona fide reasons. Rejecting the plea of the appellants that they were making entries of production on estimation basis and that the difference found was attributable to bona fide error in such estimation did....
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....y that the stock of raw material found at the time of the visit of the preventive officers on 21st January, 1981, was hot rolled and, secondly, on comparison of seized goods with the Gate Passes, it was found that the sizes indicated in the Gate Passes were different from the sizes of the goods seized. Thirdly, on an enquiry from Ghaziabad, it was reported that the materials sent under Gate Passes were cold rolled strips and not hot rolled strips. The Collector has also rejected the defence of the appellants that the goods in question were partly cold rolled in Ghaziabad and partly in Dera Bassi, as he has considered it both technically and economically not feasible. In view of this finding, the Collector has held that the appellants had procured hot rolled strips from other manufacturers without paying proper duty and fraudulently taken credits and availed of set off duty in respect of the said goods as cold rolled strips under cover of Gate Passes received from Ghaziabad unit. Accordingly, he held that the appellants "mis-utilised Rs. 2,14,850.45 on the clearance of goods on which proforma credit was not permissible" and ordered the recovery of the said amount under Rule 56A(5) o....
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....of India. It was a condition of such allotments that the materials lifted were to be used only for the purpose for which they were allotted (Cold Rolling in the case of the appellants). However, in December, 1980, the availability of raw materials improved substantially and the appellants were allotted 1,766 tonnes, which was more than 3½ times the allocation of the preceding six months. On the other hand, at that very time, the availability of power in Uttar Pradesh declined steeply and a power cut, which was to the extent of 31/3 per cent during the preceding period was enhanced to 50% with effect from 2nd December, 1980. In view of the large stock of Hot Rolled Strips, the appellants decided in December, 1980, to transfer a part of their stock to their Dera Bassi factory. Realising that the appellants could not transfer the Hot Rolled Strips from the Ghaziabad Unit to Dera Bassi without the prior permission of the Iron and Steel Controller and also apprehending that such permission, even if applied for, was not likely to be accorded, the appellants decided to transfer some of their stocks to Dera Bassi, after subjecting the Hot Rolled Strips to the process of gang slitting and,....
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....en on stock in the raw material account prescribed under Rule 173G of the Central Excise Rules, as well as the RG 23 account maintained in terms of Rule 56A. Shri Chandersekharan also pointed that the goods sent from Ghaziabad to Dera Bassi passed through Sales Tax Barrier at Kundli on the Delhi-Haryana border and Dhulkot on the G.T. Road beyond Ambala, just before the goods entered the State of Punjab. At both these Check posts, all the relevant particulars, such as the number of trucks, the contents therein, their origin and destination and the date and time of passage through the Check posts are recorded. On receipt of the goods in the Dera Bassi unit, they were subjected to further processing for conversion into Cold Rolled Strips and then supplied mostly to M/s. Atma Tube Products Pvt. Ltd. The Cold Rolled Strips so produced and the clearances of such goods from the Dera Bassi Unit were duly recorded in the statutory records. This was evidenced by regular invoices issued by the Dera Bassi factory to the Tube factory and other buyers. Shri Chandersekharan stated that there was no evidence whatsoever to support the sweeping allegations against the appellants that right from May,....
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....haziabad factory. It was strongly emphasised that, in the face of mass of documentary evidence available to the contrary, there was nothing to support the allegation that no Cold Rolled or Hot Rolled Strips had been received from Ghaziabad factory in the Dera Bassi factory since May, 1979, or that no proforma credit was admissible in respect of the goods in question or that the availment of such proforma credit was wrong or fraudulent. In respect of the credit of Rs. 3,32,678.75, availed of by the appellants in respect of Hot Rolled Strips/Skelps received during the period from 1-8-1980 to 21-1-1981, it was stated that this included goods which had been received from the Steel Authority of India on proper invoices which carried the certificate that appropriate duty of excise had been paid. Absence of subsidiary Gate Passes does not establish that the goods were non duty-paid and, therefore, not entitled to proforma credit. As regards the alleged shortage of 45.978 Mts. in the stock of Cold Rolled Strips, Shri Chandersekharan stated that in view of the position stated that the goods received from 27th December onwards were indeed Hot Rolled Strips although accounted for as Cold Roll....
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.... - 84.089 Mts. (iii) Total stock found -110.425 Mts. (iv) Deduct quantities received on 21-1-1981 and included in the stock verified. (a) Received from Ghaziabad - 27.135 Mts. (b) Received from Ludhiana - 8.695 Mts. (c) Total - 35.830 Mts. (v) Stock actually found against the recorded balances of statutory records (iii) minus (iv) - 74.595 Mts. III. VARIATION IN STOCKS (+ EXCESS - SHORTAGE) - 13.679 (-) 6. Shri Chandersekharan said that, in view of the foregoing facts and evidence on record, there is no justification for the heavy penalties, denial of balance available in proforma credit and demand of duties by the Collector. 7. We have carefully considered the submissions made before us by both sides as well as the evidence on record. This is an extraordinary case where the appellants are themselves admitting that they are guilty of mis-description of excisable goods, consequent upon such misdescription, designed to short-circuit the requirements of the Iron and Steel Controller, they also claim that they paid a higher rate of duty as per the misdescription of the goods on clearance from their Ghaziabad factory and availed of p....
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....nts on receipts in the factory of destination, intimations in Form 3 sent by the Dera Bassi factory to the local Central Excise Officers and the detailed information available date wise of the lists of trucks which passed through Kundli Sales Tax Barrier at Kundli on the Delhi-Haryana border and Dhulkot on the G.T. Road beyond Ambala, on their way to the Dera Bassi factory. At both these Check posts, full information was available as regards the number of the trucks, the contents thereof, their origin and destination and even the date and time of passage through the checkposts. Considering the very short time in which the goods have moved from the Ghaziabad factory to Dera Bassi, as evidenced by this information, there is no explanation from the department how they have come to the conclusion that the goods actually despatched from the Ghaziabad factory moved elsewhere and some other goods were transported in lieu thereof to Dera Bassi factory. In fact, there is no attempt at any verification even with the transport agencies, the Sales Tax authorities, etc. as regards the movement of the goods from Ghaziabad unit to the Dera Bassi unit. We find that on the day the Central Excise O....
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....t of the goods in the Dera Bassi factory. This data was furnished and duly verified by Shri Raghavan Iyer, OSD, who has conceded that in view of this detailed information there appears to be no doubt as regards the receipt of the goods in the Dera Bassi factory. 9. In so far as the alleged shortage of goods is concerned, a view of this has also to be taken on the basis of the position as regards due receipt and full accountal of the goods despatched from the Ghaziabad factory and received in the Dera Bassi factory. Shri Raghavan Iyer has conceded that on the basis of verification of figures of raw materials received and goods manufactured and cleared during May, 1979, to 21st January, 1981, by the Dera Bassi unit, the net shortage comes to only 29.556 Mts. This is considered negligible against the total quantity of raw material accounted for and processed by the said unit. The appellants' contention that this shortage is on account of eye estimation in the accountal of the goods lying in stock is considered not unreasonable. 10. In view of the above findings, we hold that the allegation that the appellants removed 45.978 Mts. of cold rolled strips clandestinely is not established....