JAY PEE LAMINATIONS LTD Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) A duty demand of Rs. 15,385/ - has been confirmed on shortage of CRGO steel sheets (Modvat inputs for the manufacture of CRGO steel stamping) detected on 13 -8 -1993 and Modvat credit of Rs. 94,000/ - has been disallowed on the ground that this amount of credit had been taken on damaged inputs, which were not at all used in the manufacture of final products. A penalty of Rs. 5,000/ - has also been imposed upon the appellants herein.

(2.) WE have heard Shri R.S. Pandey, Id. Consultant and Shri Sanjeev Srivastava, Id. DR.

(3.) THE explanation of the appellants that there was no shortage and physical weighment was not correct since the weighing machine installed in their premises, is of 5 tonnes capacity, whereas physical weighment of serial numbers 53, 60 and 61 of the Panchnama shows weight of 6526 kg., 6468 kg. and 6398 kg. respectively, is not tenable since the Panchnama was signed and accepted by the representative of the appellants without any demur and it is only in reply to the show cause notice which is dated 25 -10 -1995 (after a gap of over 2 years from the show cause notice), that this plea has been taken. As for the wrong availment of Modvat credit, the appellants' contention that the inputs, although damaged, were utilised in the manufacture of final products and put to optimum use, and that credit cannot be denied due to waste and scrap arising in the course of manufacture of the final products and that the provisions of Rule 57D of the Central Excise Rules, 1944 will cover such a situation, cannot be accepted for the reason that the goods were damaged in transit and were found unfit for further use in the manufacture of final products and the appellants had also received insurance claim for 69% of the imported inputs. The appellants' contention that the damaged inputs were fed into the manufacturing stream, is belied by the survey report and the appellants have also not substantiated their contention that the inputs were used for manufacture of final products. Penalty is also justified, in view of the above contraventions of the relevant rules.