COMMISSIONER OF CENTRAL EXCISE Vs. SWARAJ MAZDA LTD.

JUDGEMENT

(1.) Heard both sides. Shri P.M. Rao, learned SDR for the Revenue, pleaded that in this case the appellants were receiving metallic parts as inputs and were taking Modvat credit on the same. On scrutiny of their Modvat credit account and the material receipt account, it was found that when they were receiving the material in their factory, they physically verified the receipt of the material and the quantities found short were noted in their material receipt account. However, they have taken Modvat credit on the basis of the invoices under which the material was received. Since the material short -received was not utilized in the manufacture of the final product, therefore, they are not eligible for Modvat credit on the quantity received short. Accordingly, the Addl. Commissioner confirmed a demand of Rs. 82,784/ - and imposed a penalty of Rs. 82,784/ - under Rules 57 -I(4) of the Rules. However, on appeal, the Commissioner (Appeals) dropped the demand and penalty on the ground that short -receipt of the quantity was due to mis -placement of the material during transit or at transporter's premises and the shortages were of minor nature, therefore, he allowed the transit/handling losses and allowed the Credit as the duty was already paid on the quantity shown in the invoices. He pleaded that the appellants had not produced any proof of quantity received at the later stage and reliance placed by the Commissioner (Appeals) in the case of Bhoruka Textiles Ltd. v. CCE [2000 (116) E.L.T. 583] is not applicable to the present case as there is no question of dryage in the present case.

(2.) Shri R. Krishnan, Id. Advocate for the respondents challenged the appeal on the ground that the original order was passed by the Addl. Commissioner and, therefore, the direction to file appeal should have been issued to the Addl. Commissioner. Since the direction was issued by the Commissioner to the Asst. Commissioner for filing of the appeal, the order is not in accordance with the law. He relied on the Tribunal's decision in the case of Lloyds Metals Engg. Ltd. [2003 (159) E.L.T. 1144 (Tribunal)]. He also pleaded that the appellants are taking credit for more than Rs. 35 crores and the shortage is so small that they can have no intention to evade any payment of duty or take a wrong credit by suppressing the material facts. He stated that when the material were received the invoices were sent to the Taxation Section where the credit is taken, whereas the materials go to the store section where they take their own time to count the material received. The minor variations were not reported by the store section to Taxation Section. Therefore, there may be small variation due to handling process. He also pleaded that in a case where quantities of small items are being handled, there may be shortage of material but since the appellants have neither claimed any insurance for losses nor deducted the tax for these quantities, therefore, they have correctly taken the credit and the department's appeal may be rejected.

(3.) I have carefully considered the submissions made by both the sides.