CCE Vs. MARVEL VINYLS LTD.

JUDGEMENT

(1.) M /s Marvel Vinyls Ltd. are engaged in the manufacture of PVC sheets. The item is liable to central excise duty on ad valorem basis.

(2.) THE issue raised in these appeals is whether the appellants failed to enter full quantity of products in the books of account and pay duty on the full quantity of goods manufactured and cleared from the factory. The dispute has arisen thus. The PVC sheets manufactured by the assessee are packed and stored in rolls and sold that way. The Central Excise Officers visited the appellant's factory on 13.2.1999. They observed that lengths of PVC rolls was actually slightly (1.38 to 4%) higher than the length entered in the statutory record of production (RG -I). When questioned about discrepancy between the actual quantity found on verification and the quantity entered in the statutory records, the appellant's officer explained that the item in question is liable to shrinkage. Therefore, allowance towards shrinkage is provided to their buyers. This explanation did not satisfy the Central Excise officers. Accordingly, Show -cause Notice was issued alleging that the appellant was guilty of clearing more goods than had been accounted for and this involved evasion of central excise duty. The duty was confirmed under Order -in -Original No. 76/CEX/DFM/DC/2000 dated 25.2.2000 by the Deputy Commissioner of Central Excise. He also confiscated goods which had been seized and imposed a penalty on the appellant. The appellant took up this Order -in -Appeal before the Commissioner of Central Excise (Appeals), Bhopal and succeeded in getting the adjudication order vacated (Order -in -Appeal No. 328 -CE/BPL/2002 dated 8.4.2002). Commissioner (Appeals) noted that the item in question is prone to shrinkage. The appellant had already declared allowance of 7.5% in this regard to excise authorities. Even though the officers noticed variation of only 1.30 to 4%, they ha d projected unaccounted production and clearance of 7.5% and had demanded duty on that basis. The Commissioner (Appeals) noted that since excise was on value basis, actual quantity cleared made no difference to duty payable, inasmuch as, no additional payment had been received by the appellant towards the so -called extra quantity cleared. The Commissioner, Indore is in appeal before us against that order, holding that, order is not proper and legal. On the same issue, duty demand was confirmed on the assessee by the Commissioner, Central Excise, Indore vide his Order No. 96/2001 dated 24.12.2001. The assessee is in appeal against that order. Certain officers of the assessee have also filed appeals against penalties imposed on them under that order.

(3.) WE have perused the records and have considered the submissions made by both sides. The contention of the Revenue is that there is no provision in the Central Excise law for shrinkage allowance and that excess quantity offered by the appellants cannot be treated as quantity discount eligible for deduction. As against this, the learned Counsel's contention is that excise authorities are wholly in error in contending that quantity treated in commercial practice as shrinkage allowance is to bear duty. He has pointed out that appellant had from the beginning informed the Excise Authorities that the item in question is prone to shrinkage. In order to avoid complaint of short supply of quantity from the buyers, they were packing marginally higher lengths and supplying. However, the length charged for did not take in the quantity provided towards shrinkage. Learned Counsel also emphasized that, in any event, there was no short -levy of duty inasmuch as the appellants and discharged ad valorem duty on the total payments received on the sale of the goods. It is his contention that the entire proceeding is the result of a misconception.