Assam Alloys Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. after hearing both sides, we consider that the issue is regarding denial of modvat credit of rs. 88,854.00 (rupees eighty-eight thousand eight hundred and fifty-four) on certain inputs found short during stock-taking after the visit of the officers to the assessee's premises. during the physical stock-taking, balance of the stock of input, sponge iron and that of the stock input, ferro manganese, were found short. it was also found that certain quantity of the final product i.e. alloys casting, was found in excess as per the assessee's records as well as the statutory records.2. the issue has been explained to the effect that the resultant shortage had occurred due to burning loss and such burning loss was a technical necessity, when there was any such manufacturing process.that the inputs and removal thereof, for manufacture, are never weighed, is also an explanation being offered by the applicant/appellant-company.3. considering the issue involved and the fact that the applicant/appellant-company has nothing further to submit in this matter, we take up this appeal for final, disposal, after waiver of the pre-deposit requirement under section 35f of the central excise act, 1944.4. it is an admitted fact that the shortages recorded have been admitted. the explanation of burning loss for the shortage of the inputs in stock, cannot be accepted considering that the shortage of 77 m.t. in case of sponge iron and that of 10 m.t. in case of ferro maganese, were noticed, and an excess of 5 m.t. in case of the final product, i.e. alloys casting, was also noticed. these shortages percentage-wise, have exceeded 100% in case of sponge iron and 80% in case of ferro maganese. we cannot accept the explanations of burning loss because no weighment to account for the shortage of inputs, when we find that the excess goods are being produced from the said inputs, and not accounted for. we would also not agree with the proposition that input-shortages would occur due to burning loss even before the issue of the same for manufacture. since the shortages of inputs have not been satisfactorily explained, we would confirm the modvat reversal of rs. 88,854,00 as arrived at by the lower authority.5. we would also find that the lower authorities have not upheld any penalty. therefore, we refrain from passing any order as regards penalty. the appeal is disposed of in above terms.

Judgment:
1. After hearing both sides, we consider that the issue is regarding denial of Modvat credit of Rs. 88,854.00 (Rupees eighty-eight thousand eight hundred and fifty-four) on certain inputs found short during stock-taking after the visit of the Officers to the assessee's premises. During the physical stock-taking, balance of the stock of input, Sponge Iron and that of the stock input, Ferro Manganese, were found short. It was also found that certain quantity of the final product i.e. Alloys Casting, was found in excess as per the assessee's records as well as the statutory records.

2. The issue has been explained to the effect that the resultant shortage had occurred due to burning loss and such burning loss was a technical necessity, when there was any such manufacturing process.

That the inputs and removal thereof, for manufacture, are never weighed, is also an explanation being offered by the applicant/appellant-company.

3. Considering the issue involved and the fact that the applicant/appellant-company has nothing further to submit in this matter, we take up this appeal for final, disposal, after waiver of the pre-deposit requirement under Section 35F of the Central Excise Act, 1944.

4. It is an admitted fact that the shortages recorded have been admitted. The explanation of burning loss for the shortage of the inputs in stock, cannot be accepted considering that the shortage of 77 M.T. in case of Sponge Iron and that of 10 M.T. in case of Ferro Maganese, were noticed, and an excess of 5 M.T. in case of the final product, i.e. Alloys Casting, was also noticed. These shortages percentage-wise, have exceeded 100% in case of Sponge Iron and 80% in case of Ferro Maganese. We cannot accept the explanations of burning loss because no weighment to account for the shortage of inputs, when we find that the excess goods are being produced from the said inputs, and not accounted for. We would also not agree with the proposition that input-shortages would occur due to burning loss even before the issue of the same for manufacture. Since the shortages of inputs have not been satisfactorily explained, we would confirm the Modvat reversal of Rs. 88,854,00 as arrived at by the lower authority.

5. We would also find that the lower authorities have not upheld any penalty. Therefore, we refrain from passing any order as regards penalty. The appeal is disposed of in above terms.