AKSHAY ALUMINIUM ALLOYS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are manufacturers of aluminium alloy ingots from aluminium scrap. On August 8, 2008, the Jurisdictional Central Excise Officers visited the appellant's factory and took stock of the finished products as well as the inputs. The stock taking was done over a period of about ten days by weighing each item. On stock taking, excess stock of 80 kgs., 3,314 kgs., 19,111 kgs., 5,253 kgs. and 17 kgs. vis   -vis balance as recorded in the stock account was found in respect of aluminium ingots (finished products), aluminium scrap (raw material), aluminium dross, aluminium ash and residue and silicon metal, respectively. There was also a shortage in respect of some other Cenvat credit availed of inputs involving Cenvat credit of Rs. 1,895. After issue of show -cause notice, the Jurisdictional Assistant Commissioner vide order -in -original dated February 26, 2001 confirmed the Cenvat credit demand of Rs. 1,895 along with interest, ordered confiscation of the excess stock of aluminium scrap, aluminium dross and aluminium alloy ingots, with option to be redeemed on payment of redemption fine and besides this, while imposing penalty of Rs. 1,55,980 on the appellant -company under rule 25 of the Central Excise Rules, 2002, imposed penalty of Rs. 50,000 on Shri A.K.L. Karan, manager of the appellant -company under rule 26 of the Central Excise Rules for failure to maintain the prescribed records. On appeals being filed to the Commissioner (Appeals), the Commissioner (Appeals) vide order -in -appeal dated November 15, 2010 while holding that there is nothing on record to establish that the appellant -company had any intention to clandestinely remove the seized unaccounted goods, still upheld the imposition of penalty on the appellant -company as well as on their manager. However, the penalty on the appellant -company was reduced to Rs. 50,000 and the penalty on their manager was reduced to Rs. 20,000. Against this order of the Commissioner (Appeals), these two appeals have been filed. Heard both the sides.

(2.) SHRI A.C. Jain, advocate, learned counsel for the appellant, pleaded that the alleged excess detected in the stock of aluminium ingots and aluminium scrap are 0.06 percent and 0.81 percent, respectively of the total stock and such excess cannot be treated as real excess as the same can be attributable to the mistake in the accountal or mistake in the weighment, that aluminium dross and aluminium ash and residue arise in the course of manufacture of aluminium ingots and the same is recycled for use and hence, there was no requirement to maintain its stock, that the shortages in respect of Cenvat credit availed of inputs was minuscule involving Cenvat credit of only Rs. 1,895, which could be due to mistake in weighment, that from the shortages or excess detected during stock taking, it cannot be concluded that there was any intention on the part of the appellant to clear their finished products clandestinely, that a clear finding to this effect has been given by the Commissioner (Appeals) in paragraph 9 of her order, that the apex court in the case of Hindustan Steel Ltd. v. State of Orissa reported in : [1972] 83 ITR 26 (SC) : [1978] 2 ELT J159 (SC) has held that no penalty could be imposed on the technical breach of legal provisions, that shortage or excess in this case were due to accounting mistake or mistake in weighment and no motive can be attached to the appellant, that the Tribunal while disposing of the appellant's stay application by stay order dated April 29, 2011 has also given a clear finding that the Department has not been able to produce any evidence of the appellant having manufactured and cleared any final product from the factory without accounting or that there was any intention on their part to manufacture or clear unaccounted goods, that in view of these circumstances, the Commissioner (Appeals)' order upholding penalty on the appellant -company and their manager to the extent of Rs. 50,000 and Rs. 20,000 is not sustainable.