Beck India Ltd. Vs. the Commissioner of Central

Beck India Ltd. vs The Commissioner of Central

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai Decided Jul 19, 2004

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Citation: sooperkanoon.com/35993
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Judge: M T K.D.
Decided On: Jul 19, 2004
Subject: Excise

Case Summary

AI-generated summary - not the official court judgment text.

Excise

Key legal issue: Excise

Parties & Advocates

Appellant / Petitioner

Beck India Ltd.

Respondent

The Commissioner of Central

Legal References

Reported In: (2004)(173)ELT70Tri(Mum.)bai

Excerpt

.....the demand of duty confirmed against the appellants by the joint commissioner was upheld. the demand for rs. 4,67,125/- was confirmed against the appellants on the ground that there was a shortage of physical . stock of the inputs in the appellants factory, compared to the stock figuring in the modvat record. this shortage was noticed during the process of stock verification. accordingly, it was held that equivalent quantity of inputs found short has been removed in a clandestine manner and subsequently penalty of equivalent amount was also confirmed corresponding with the duty demand.3. the appellants have submitted a list of items of inputs which are involved in this case which is as under:- i) toluene (ii) mineral turpentine (iii) butyl acetate (iv) ethyl acetate (v) butyl alcohol (vi) xylene (vii) methyl ethyl ketone (viii) monostyrene (ix) butylated hydroxy toluene (x) solvent cix (xi) white spirit 4. it is the appellant's case that, had they shown the entire quantity of inputs manifested in the duty paying documents as having been issued for manufacture, there would not have been any case for denial of credit since the loss of inputs in the process does not require reversal of credit of the duly paid on the quantity lost in process. it is only on account of a system of maintaining records, showing the actual quantity issued for production that the loss in the physical stock is visible. in the absence of any tangible evidence of removal of inputs outside the factory the demand need not have been issued. if the appellants were to show the issue of the entire quantity of inputs for manufacture, the shortage would have been considered as processing loss which does not attract any duty under the provisions of the modvat rules.5. i note that the inputs in question are volatile in nature and the fact that after receipt of the inputs, these have been sent only for manufacturing operations, unless the loss due to evaporation is ruled out, to level the allegation of.....

Full Judgment

1. The appellant's appeal is directed against the order-in-original, Whereby the demand of duty confirmed against the appellants by the Joint Commissioner was upheld. The demand for Rs. 4,67,125/- was confirmed against the appellants on the ground that there was a shortage of physical . stock of the inputs in the appellants factory, compared to the stock figuring in the Modvat record. This shortage was noticed during the process of stock verification. Accordingly, it was held that equivalent quantity of inputs found short has been removed in a clandestine manner and subsequently penalty of equivalent amount was also confirmed corresponding with the duty demand.

3. The appellants have submitted a list of items of inputs which are involved in this case which is as under:- i) Toluene (ii) Mineral Turpentine (iii) Butyl Acetate (iv) Ethyl Acetate (v) Butyl Alcohol (vi) Xylene (vii) Methyl Ethyl Ketone (viii) Monostyrene (ix) Butylated Hydroxy Toluene (x) Solvent CIX (xi) White Spirit 4. It is the appellant's case that, had they shown the entire quantity of inputs manifested in the duty paying documents as having been issued for manufacture, there would not have been any case for denial of credit since the loss of inputs in the process does not require reversal of credit of the duly paid on the quantity lost in process. It is only on account of a system of maintaining records, showing the actual quantity issued for production that the loss in the physical stock is visible. In the absence of any tangible evidence of removal of inputs outside the factory the demand need not have been issued. If the appellants were to show the issue of the entire quantity of inputs for manufacture, the shortage would have been considered as processing loss which does not attract any duty under the provisions of the Modvat rules.

5. I note that the inputs in question are volatile in nature and the fact that after receipt of the inputs, these have been sent only for manufacturing operations, unless the loss due to evaporation is ruled out, to level the allegation of clandestine removal of inputs on account of mere shortage in the raw materials, cannot be substantiated.

The appellants also pleaded that this shortage is a very small fraction compared to the large volume of inputs received and consumed by them.

For e.g., it has been stated that as against the receipt of inputs worth Rs. 24 crores in the year 1993-94, duty on the quantities lost has been worked out to Rs. 60,000/-. Though this comparison is in value terms, it does establish the point of the shortage being a small fraction, the products being volatile in nature, loss due to evaporation is not unlikely. Hence .. build up the case of clandestine removal of inputs, some independent corroborative evidence is required, which is missing in this case.

6. On the basis of the discussion above, I hold that the case of clandestine removal of the inputs is not well substantiated. Therefore, I allow the appeal and set aside the orders of the lower authorities.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Mumb... Same Parties Beck India Ltd. vs The Commissioner of Central Same Subject Excise Same Judge M T K.D.