Triveni Engg. Works Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. the present appeal has been filed by m/s. triveni engineering works ltd. against the order dated 12-3-1992 passed by the additional collector confirming the demand of duty in respect of 61.685 mt of iron & steel scrap found short during the visit of the factory premises by the central excise officers on 8-11-1990, the additional collector also confiscated the seized copper scrap and aluminium scrap with an option to redeem the same on payment of fine of rs. 5,000/-. he had also imposed a penalty of rs. 5,000/- on the appellants.2. shri m.p. devnath, learned advocate, submitted that the proper verification of the stock was not done by the officers; that the physical stock was lying in the factory; that officers found 1 m.t. of scrap on the shop floor which was compared with the recorded balance of waste and scrap in rg-1 which was 62.685 m.t.; that this quantity was scattered throughout the premises of the factory which was not looked into by the officers. he, further, submitted that officers had seized 80 m.t. of scrap earlier on 7-11-1989 which was released on 24-5-1990; that this quantity was then recorded in rg-1; that subsequently scrap was cleared out of this 80 m.t. upto 13-7-1990 on payment of duty leaving a balance of 62.685 m.t. as recorded in rg-1 which was separately maintained for the released stock of 80 mt scrap; that the officers checked the said rg-1 on the date of visit and observed shortage. the learned advocate further mentioned that 1 mt of scrap of iron and steel found by the officers pertained to freshly generated waste and scrap of iron and steel; that the quantity of scrap said to be found short was subsequently cleared on payment of duty; that there was balance 39.345 mt of such scrap in august, 1991 and 28.300 mt on 26-12-1991; that such balance of scrap which was checked by the officers and rg-1 register was initialled also by them in token of having checked the balance. he, therefore, contended that such checks and verifications support the version of the appellants that there was actually no shortage of the waste and scrap on iron and steel. as regards the other scrap since the collector's finding is that they are wholly exempt, the confiscation and imposition of redemption fine is unsustainable and it is well settled that there can be no seizure within the factory.3. shri r.k. sharma, learned sdr, submitted on behalf of the revenue, that on the day of visit of the officers, when shortage of 61.685 mt of waste & scrap of iron was found, shri anil gupta, appellants' representative could not give any satisfactory reply; that on the request of advocate for the appellants before the additional collector, the superintendent of central excise was again deputed to reverify the stock of waste and scrap of iron and steel on 2/3-12-1991 and they reported that they had not found any physical balance of scrap of iron and steel as averred by the appellants. he further submitted that the additional collector had confirmed the demand of duty only after reverification. he relied upon the decision in the case of uptron india ltd. v. c.c.e., 1994 (70) e.l.t. 155 (t) in which it was held that if satisfactory explanation for the shortage detected is not forthcoming, duty is demandable. the learned sdr also referred to the decision in h & r johnson (i) ltd. v. cce, 1994 (71) e.l.t. 589 (t) wherein it was held that as stock taking was done in presence of assessee's representative and stock verification report signed, shortage and excesses determined as a result of stock taking have to be deemed having been established.4. we have considered the submissions of both the sides. it is admitted position that the adjudicating authority had deputed the central excise officers for reverification of the stock after more than one year of the detection of shortage of waste and scrap of iron and steel and even at that time the shortage could not be explained by the appellants. we also observe that even at the time of hearing before us, proper explanation has not been brought forward to prove that there was no shortage in the stock of waste and scrap. no total picture regarding the stock of waste and scrap of iron and steel has been brought on record on the date of visit of the officers on 8-11-1990. the burden is cast upon the appellants to prove that the physical stock of the goods tallied with the balance mentioned in rg-1 once the department had, after physical verification, found the shortages. as the appellants had not satisfactorily explained the shortages we do not find any infirmity in the impugned order regarding confirming the demand of duty on quantity of waste and scrap of iron and steel found short. regarding aluminium scrap the appellants have contended that the said scrap was generated out of aluminium goods in respect of which modvat credit of duty was not availed of; that the copper scrap was exempted from payment of duty under notification no. 172/84 and 182/84. this position has not been rebutted by the department. in fact we observe from the impugned order that the range superintendent had stated that the appellants had not availed any modvat credit on aluminium goods.further, the additional collector himself mentioned in the impugned order that they would be entitled for exemption in respect of copper scrap. taking into consideration these facts, we vacate the confiscation order in respect of copper and aluminium scrap. but for this modification, the appeal filed by the appellants is rejected.

Judgment:
1. The present appeal has been filed by M/s. Triveni Engineering Works Ltd. against the order dated 12-3-1992 passed by the Additional Collector confirming the demand of duty in respect of 61.685 MT of Iron & Steel scrap found short during the visit of the factory premises by the Central Excise Officers on 8-11-1990, The Additional Collector also confiscated the seized copper scrap and aluminium scrap with an option to redeem the same on payment of fine of Rs. 5,000/-. He had also imposed a penalty of Rs. 5,000/- on the appellants.

2. Shri M.P. Devnath, learned Advocate, submitted that the proper verification of the stock was not done by the officers; that the physical stock was lying in the factory; that officers found 1 M.T. of scrap on the shop floor which was compared with the recorded balance of waste and scrap in RG-1 which was 62.685 M.T.; that this quantity was scattered throughout the premises of the factory which was not looked into by the officers. He, further, submitted that officers had seized 80 M.T. of scrap earlier on 7-11-1989 which was released on 24-5-1990; that this quantity was then recorded in RG-1; that subsequently scrap was cleared out of this 80 M.T. upto 13-7-1990 on payment of duty leaving a balance of 62.685 M.T. as recorded in RG-1 which was separately maintained for the released stock of 80 MT scrap; that the officers checked the said RG-1 on the date of visit and observed shortage. The learned Advocate further mentioned that 1 MT of scrap of iron and steel found by the officers pertained to freshly generated waste and scrap of iron and steel; that the quantity of scrap said to be found short was subsequently cleared on payment of duty; that there was balance 39.345 MT of such scrap in August, 1991 and 28.300 MT on 26-12-1991; that such balance of scrap which was checked by the officers and RG-1 register was initialled also by them in token of having checked the balance. He, therefore, contended that such checks and verifications support the version of the appellants that there was actually no shortage of the waste and scrap on iron and steel. As regards the other scrap since the collector's finding is that they are wholly exempt, the confiscation and imposition of redemption fine is unsustainable and it is well settled that there can be no seizure within the factory.

3. Shri R.K. Sharma, learned SDR, submitted on behalf of the Revenue, that on the day of visit of the officers, when shortage of 61.685 MT of waste & scrap of iron was found, Shri Anil Gupta, appellants' representative could not give any satisfactory reply; that on the request of Advocate for the appellants before the Additional Collector, the Superintendent of Central Excise was again deputed to reverify the stock of waste and scrap of iron and steel on 2/3-12-1991 and they reported that they had not found any physical balance of scrap of iron and steel as averred by the appellants. He further submitted that the Additional Collector had confirmed the demand of duty only after reverification. He relied upon the decision in the case of Uptron India Ltd. v. C.C.E., 1994 (70) E.L.T. 155 (T) in which it was held that if satisfactory explanation for the shortage detected is not forthcoming, duty is demandable. The learned SDR also referred to the decision in H & R Johnson (I) Ltd. v. CCE, 1994 (71) E.L.T. 589 (T) wherein it was held that as stock taking was done in presence of assessee's representative and stock verification report signed, shortage and excesses determined as a result of stock taking have to be deemed having been established.

4. We have considered the submissions of both the sides. It is admitted position that the Adjudicating Authority had deputed the Central Excise Officers for reverification of the stock after more than one year of the detection of shortage of waste and scrap of iron and steel and even at that time the shortage could not be explained by the appellants. We also observe that even at the time of hearing before us, proper explanation has not been brought forward to prove that there was no shortage in the stock of waste and scrap. No total picture regarding the stock of waste and scrap of iron and steel has been brought on record on the date of visit of the officers on 8-11-1990. The burden is cast upon the appellants to prove that the physical stock of the goods tallied with the balance mentioned in RG-1 once the Department had, after physical verification, found the shortages. As the appellants had not satisfactorily explained the shortages we do not find any infirmity in the impugned order regarding confirming the demand of duty on quantity of waste and scrap of iron and steel found short. Regarding aluminium scrap the appellants have contended that the said scrap was generated out of aluminium goods in respect of which Modvat credit of duty was not availed of; that the copper scrap was exempted from payment of duty under Notification No. 172/84 and 182/84. This position has not been rebutted by the Department. In fact we observe from the impugned order that the Range Superintendent had stated that the appellants had not availed any Modvat credit on aluminium goods.

Further, the Additional Collector himself mentioned in the impugned order that they would be entitled for exemption in respect of copper scrap. Taking into consideration these facts, we vacate the confiscation order in respect of copper and aluminium scrap. But for this modification, the appeal filed by the appellants is rejected.