Case Law Details
N R Sponge Private Limited Vs Commissioner Customs (CESTAT Delhi)
The issue under consideration is whether the Central Excise Officers are correct in levying duty on account of discrepancies in the records of the appellant and shortages in the stock of raw-material as well as finished goods?
In the present case, the appellant is engaged in manufacture of sponge iron and dolochar. They are availing the benefit of Cenvat Credit of duty paid on inputs and capital goods under Cenvat Credit Rules, 2004. Based on an intelligence, the Central Excise Officers of Preventive Wing, Headquarters, Raipur conducted searches at the factory as well as office premises of the appellant simultaneously. Certain documents were recovered from the weighbridge inside the appellant’s factory premises on the basis whereof sponge iron weighing 124.790 MT involving Central Excise duty of Rs.3,47,359/- was alleged to have been removed clandestinely. The Officers also conducted the verification of the stock of raw-material and finished goods and alleged shortage in stock of coal by 11797.865 MTs invoking Central Excise duty of Rs.6,62,759/- and also shortage of sponge iron weighing 72.160 MTs. invoking the duty of Rs.8,42,031/-.
CESTAT states that, the entire demand on the basis of the discrepancies in the records of the appellant and shortages in the stock of raw-material as well as finished goods but presuming that such discrepancies and shortages are admitted by the employee of the appellant. It is submitted that perusal of statement of Devi Lal Sahu is clear enough that there is no such admission of the alleged gain. There is otherwise no evidence on record for confirming demand raised by the department. But such order of original adjudicating authority has still been confirmed by Commissioner (Appeals), hence, the same is liable to be set aside. Otherwise also there is sufficient evidence to falsify the allegations raised in the show cause notice. The clearances of appellants were duly declared in their ER-1 /ER-6 returns. The copies thereof were duly provided to the adjudicating authorities but they have ignored the same and have proceeded on their own wrong presumption of it to be a case of clandestine removal. It is further submitted that any record of weighbridge slips is not at all relevant for checking the clearances because the weighbridge exist inside the premises of the factory. The question of payment of duty on the basis of weighment slips does not at all arise unless and until those goods were actually found to have been cleared from the factory. With respect to shortage of coal, it is submitted that the same was only due to the fact that the coal was cleared as such on reversal of input credit which clearly find mention in ER-1/ER-6 Returns. Also the coal was crushed to coal dust and was cleared on payment of duty which is also visible from the said return. No question of any shortage in coal as alleged at all arises. With respect to the alleged shortage of sponge iron, it is mentioned that the opinion has been formed on the basis of weighment which was on estimation basis and was never on actual basis. Above all, the entire case revolves around, the loose papers recovered during the time of search but there is no evidence collected by the aiding/ investigating team as to who was the author of those slips. Devi Lal Sahu has clearly denied himself to be the author. Question of any admission of guilt on his part does not at all arise. With these submissions, the order under challenge is alleged to be wrong and baseless and is prayed to be set aside.
FULL TEXT OF THE CESTAT JUDGEMENT
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