Saru Concast Alloys P.Ltd Vs. Cce, Meerut-i - Court Judgment

Per Ms. Archana Wadhwa, J.

1. As per facts on record, the appellant is engaged in the manufacture of copper wire falling under Chapter 74 of the Central Excise Tariff Act.  Their factory was visited by the officers on 17.10.06 who conducted various checks and verification.  As a result 41.51 kg. of scrap (PB, 200 kg of brass scrap and 694.03 kg of PB wire) was found in excess to the recorded balance.  On a reasonable believe that the same was meant for clandestine removal, officers seized the same u/s 110 of the Customs Act, 1962.  Apart from excess, officers also detected shortages of 499 kg. of copper and 405 kg. of zinc and 145 kg. of phosphorus then the recorded balance in the statutory records involving duty of Rs.3,50,915/-.

2. On the above basis, Show Cause Notice (SCN) was issued to the appellant proposing confiscation of the excess found material, confirmation of demand on the short found inputs as also for imposition of penalty.  The said order culminated into an order passed by adjudicating authority confiscating the excess found scrap and wire with an option to the appellant to redeem the same on payment of redemption fine of Rs.15,000/-, demand of duty of Rs.3,50,915/- was confirmed in respect of shortages of inputs.  Penalty of Rs.4,19,366/- was imposed on the appellant and penalty of Rs.10,000/- was imposed on Shri Pankaj Jain, Director of the firm.  The said order was upheld by Commissioner(Appeals).  Hence the present appeal.

3. After hearing both the sides, I find that the appellants have taken a categorical stand that excess scrap was not being entered by them in their records as the same was being captively consumption and no objection was ever raised by the Revenue.  As regards 694.03 kg of PB wire, they contended that the same was received by them from their job worker on 17.10.06 itself and the entry was yet to be made in the records.  As regards shortage of raw material, they explained that the said raw material was issued from their records for further manufacture and the quantity of 5511 kg. of semi-finished goods which was physically found available in the factory was manufactured out of the said raw material.  However the entry of issuance of the said raw material could not be made in their statutory records on account of clerical error.  Accordingly they have prayed for setting aside the impugned order.

4. I find that as regards the excesses, there is no evidence showing that the appellant was in the process of removing the goods without entering the same in the records.  The appellant at the time of seizure itself had taken a categorical stand that the said excess found wire was received by them from their job worker on the date of visit of the officers and the entries in respect of the same was to be made within a period of 24 hours.  As such extending the benefit to the appellant, I set aside the confiscation of excess found scrap and wire.

5. As regards, confirmation of demand on the shortages of inputs, I find that the admittedly quantity of 5511 kg. of semi-finished goods was found by the officers at the time of physical verification of the goods.  The said quantity was manufactured out of the said raw material alleged to be found short.  As such this is not a case of removal of the inputs from the factory but as a mere case of technical error of not making entry for issuance of inputs in the statutory records.  As such there in no justification for confirmation of demand of duty.

6. In as much as confiscation of goods as also confirmation of demand is set aside, the penalty imposed upon the manufacturing unit as also on the Director of the unit is also set aside.  In nutshell, both the appeals are allowed with consequential relief to the appellant.