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2015 DIGILAW 22 (GUJ)

JIGAR FOUNDRY v. COMMISSIONER OF CENTRAL EXCISE

2015-01-08

R.P.DHOLARIA, V.M.SAHAI

body2015
JUDGMENT : VIJAY MANOHAR SAHAI, J. 1. We have heard Mr. Paritosh Gupta, learned counsel appearing for Mr. Paresh M. Dave appearing for the appellant and Mr. Yogesh M. Ravani, learned Central Government Standing Counsel appearing for the respondents. 3. In this Tax Appeal, the appellant – assessee has challenged the judgment and order dated 4.8.2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai in Appeal No.E/1995/2003. 3. The facts of the case are that the appellant is engaged in the business of manufacture of Cast Iron castings (C.I. Castings). The appellant has been working under the Modvat Scheme in as much as the inputs like pig iron and furnace oil are covered under the Modvat Scheme. On 2.5.1997, the Central Excise Officers visited the appellant’s factory and conducted physical verification of the records as well as stocks, note books etc. During the course of inspection, the Officers found shortage of 221.388 MT of pig iron valued at Rs.13,61,536/-. The said shortage was worked out the Modvat credit to Rs.2,04,230/-. 4. On 9.7.1998, show-cause notice was issued to the appellant proposing to deny and recover Central Excise Duty (Modvat credit) totalling to Rs.2,04,230/-on the inputs which were found as shortage, proposing to impose penalty on the appellant and also proposing to charge and recover interest from the appellant. 5. The Deputy Commissioner of Central Excise passed an Order-In-Original dated 30.3.1999 holding that the appellant had availed Modvat credit on pig iron, which was found short and the same was not used in the manufacture of final goods, thereby resulting in wrong availment of Modvat credit. The Deputy Commissioner of Central Excise also imposed penalty of equal amount of Rs.2,04,230/-. 6. Being aggrieved by the aforesaid order passed by the Deputy Commissioner of Central Excise, the appellant – assessee preferred an appeal before the Commissioner (Appeals), Ahmedabad which came to be allowed vide order dated 6.2.2013. 7. Against the aforesaid order passed by the Commissioner (Appeals), the revenue preferred appeal before the CESTAT which came to be dismissed thereby restoring the order passed by the Deputy Commissioner confirming demand of duty against the appellant. However, the Tribunal has reduced the penalty to Rs.50,000/- from Rs.2,04,230/-. 8. This Tax Appeal was admitted on the following substantial question of law :- “Whether the Appellate Tribunal is right in considering wastage of 221.338 M.Ts. However, the Tribunal has reduced the penalty to Rs.50,000/- from Rs.2,04,230/-. 8. This Tax Appeal was admitted on the following substantial question of law :- “Whether the Appellate Tribunal is right in considering wastage of 221.338 M.Ts. (2,21,338 Kgs.) of iron as loss of inputs for demanding duties thereon ?” 9. Having considered the rival submissions came to be made as well as from the perusal of the inspection note as well as while carrying out inspection, the statement of the appellant was recorded wherein he has clearly and categorically admitted and shown willingness to pay the duty upon the aforesaid wastage of iron which could not be shown due to the entries made in the register and it was again shown as a fresh raw material. In view of this peculiar facts and circumstances of the case, 10. In view of this peculiar facts and circumstances of the case, when it is clear that the wastage of iron was shown as new raw material and when the appellant himself has agreed to pay the excise duty thereon, therefore, the decision rendered by the CESTAT upon the aforesaid peculiar facts and circumstances of the case is in consonance both in law and on facts. Hence, the appeal fails and is accordingly dismissed. The question is answered against the assessee and in favour of the revenue.