GREAVES COTTON LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of ICD Engines. PD Pumps and parts thereof falling under Chapter No. 84 and Gensets falling under Chapter 85 of Central Excise Tariff Act, 1985. The appellants are availing the Cenvat Credit facility. As per their Internal Audit Report for the year 2002 -2003, there was a shortage of raw materials valued at Rs. 33.42 lakhs involving Cenvat Credit of Rs. 5,34,746/ -. The Appellant's Senior Executive (Commercial) Shri S.P. Ponde, accepted the Cost Audit Report to be binding on the company to submit that such shortage of raw material was not on account of any mis -utilisation but on account of various reasons. Reference was made to Cost Accountant's letter dated 16 -5 -2004 detailing the reasons for such shortages.

(2.) HOWEVER , the proceedings were initiated against them by way of issuance of show cause notice dated 15 -12 -2004 proposing reversal of Modvat credit. The said proceedings culminated into an order passed by the Joint Commissioner confirming the demand of duty and also imposing personal penalty of identical amount. Appeal against the above order did not succeed before the Commissioner (Appeals), hence the present appeal.

(3.) NOBODY has appeared on behalf of the appellants. I have heard Shri P.K. Pardeshi, ld. DR. The appellants have categorically stated before the authorities below that their production is voluminous and is to the extent of 142.52% of its installed capacity, the same involves complicated material movement and account system, as can be seen from the production flow chart. A sophisticated computerized accounting system to ensure maximum accuracy was introduced during the year 2002 -2003 and during the implementation stage and due to transfer from old system, certain inaccuracies might have crept in. They also referred to excess inventory in the Cost Audit Report and pleaded for neutralizing the same against the shortages. If that is done the shortage would come to 0.2% of the total material consumed, which is insignificant in relation to the volume and nature of business. They also raised the following contention before the appellate authority: that the show cause notice ignores the following salient points of M/s. Sharp and Tannan, Statutory Auditor reported on 20 -7 -2003.