Full Judgment
2. The duty has been affirmed on the appellants on account of detection of shortage of the raw materials/inputs at the time of checking made on 28-2-1998 by the officers of the Central Excise of the stock of finished goods, semi-finished goods, raw materials/inputs. The learned Counsel has contended that in fact proper procedure was not adopted by the officers for determining the shortage as no weighment of the goods was made and shortage has been calculated on presumptions and assumptions which is not permissible under the law. He has also contended that penally under Section 11AC could not be imposed as this Section has not been invoked in the show cause notice. The learned Counsel has referred to the ratio of law laid down in Sanket Food Products P Ltd. v. C.C.E., Aurangabad [2003 (162) E.L.T. 231 (T) - 2003 (58) RLT 869].
3. On the other hand, the learned JDR has reiterated the correctness of the impugned order.
4. I have heard both sides and gone through the record. The perusal of the record shows that the appellants are engaged in the manufacture of polythene bags, MV parts of plastics and plastic parts of electric fans. They filed Modvat declaration under Rule 57G for availing Modvat credit on the inputs. The perusal of the statutory records maintained by them for the period 1-4-1997 to 19-2-1998 revealed that they purchased modvatable raw materials of 69,330 Kgs. as per the invoices.
But the weight of the finished products cleared by them during that period was 57,025.400 Kgs. after taking into consideration the weight of the finished products and the scrap generated during that period.
After giving allowance of burning loss of 2% on the inputs as claimed by Rakesh Agarwal, Partner of the appellants, the shortage of the inputs was arrived at 6,078.600 Kgs. Shri Rakesh Agarwal at the spot could not explain the shortage. He rather in his statement accepted the same. The contention of the Counsel that physical verification was not properly carried out by weighment of the raw materials and finished goods cannot be accepted, when Rakesh Agarwal, partner of the appellants at the spot never raised such an objection and did not ask for re-verification of the stock. On the raw materials found short, the appellants are legally duty bound to pay the duty for having availed the credit thereon. The impugned order in this regard is perfectly valid. The ratio of law laid down in Sanket Food Products P. Ltd, (supra) is not attracted to the case of the appellants. In that case, the allegation of clandestine removal of gutkha was based on the bags found without markings in customer's premises and for that reason, it was observed that clandestine removal of the goods was not proved. But such is not the position in this case.
5. Similarly the argument of the learned Counsel that penalty under Section 11 AC could not be imposed cannot be accepted. The bare perusal of the show cause notice shows that penalty of the amount equal to that of duty amount was proposed to be imposed on the appellants; The only mistake appearing in the show cause notice is that instead of mentioning Section 11AC, Section 11A had been typed. Rule 57-I had been correctly mentioned. Mere the omission to mention the correct Section for imposing penalty did not render the show cause notice invalid. The appellants cannot be said to had been taken by surprise regarding imposition of penalty on them. Rather they knew that penalty equal to the amount of duty had been sought to be recovered from them through the show cause notice.
6. In view of the discussion made above, I do not find any illegality in the impugned order and the same is upheld. The appeal of the appellants is dismissed.