Per K.K. Bhatia :

The appellants manufacture steel ingots from steel scrap. On 17.5.94, their factory premises were visited by the Central Excise staff of Amritsar Division. On verification of the finished goods, it was ascertained that there was an excess of 25 pieces of steel ingots weighing 2456.250 kgs. as against the balance recorded in their RG.1 Register. Accordingly, these ingots valued at Rs. 21,615/- were seized. The visiting officers also found shortage of 35.280 MTs of steel scrap valued at Rs. 3,10,464/-. Accordingly they were issued a show cause notice dated 14.11.94 by the Asst. Collector of Central Excise, Amritsar in which it was alleged that the party had removed the steel scrap found short after converting it into steel ingots and cleared them without payment of duty amounting to Rs. 46,570/- in violation of the provisions of Rules 9(1), 52A, 53, 173G and 226 of the Central Excise Rules, 1944 is liable to be recovered from them under Rule 9(2) and under Section 11A of the Central Excise Act, 1944. In respect of the finished goods viz., steel ingots found in excess, it was alleged that the seized goods were kept unaccounted for in contravention of Rules 53, 173G and 226 and they were liable to be confiscated under Rule 173Q and Rule 226. They were therefore called upon to show cause why the seized goods should not be confiscated and why the Central Excise duty amounting to Rs. 46,570/- on 35.280 MT of iron and steel scrap found short which were converted into steel ingots and removed without payment of duty should not be recovered from them. They were further called upon to show cause why penalty should not be imposed on them under Rule 9(2), 52A, 173Q and 226 of Central Excise Rules, 1944.

2. On considering the reply of the party, the Deputy Commissioner of Central Excise, Chandigarh-II vide his Order dated 22.5.98 confirmed the duty of Rs. 46,570/- on the steel ingots alleged to have been obtained on conversion of the steel scrap and removed without payment of duty. He also ordered for the confiscation of the steel ingots weighing 2456.250 kgs. found in excess and seized but since the goods had already been released under bond to the party, he imposed a fine of Rs. 3,500/- in lieu of confiscation on them. The adjudicating authority also confirmed a duty of Rs. 3,242/- for these ingots. The appellants were further subjected to a penalty of Rs. 40,000/-.

3. The party filed an appeal but the Commissioner (Appeals), Chandigarh vide his Order dated 20.1.2001 rejected their appeal with the following observation :

"I have considered the matter carefully and find that Central Excise staff from Amritsar Division on physical verification had found 25 pcs. of steel ingots lying in excess over and above the recorded balance of the goods in stock. The staff also detected a shortage of 35.280 MT of scrap against the recorded balance in the statutory records. The verification of the stock had been conducted in the presence of the Director of the company who had admitted the recovery of excess stock of ingots and shortage of scrap. The arguments that the excess quantity of ingots recovered was the production of night shift and that weighment was conducted in a crude manner are mere afterthoughts and not acceptable. In view of the facts circumstances of the case, the order of the lower adjudicating authority is upheld".

4. This appeal is against the impugned order of Commissioner (Appeals). The appellants have also filed a Miscellaneous Petition for some additional arguments. I have heard Sh. J.P.Kaushik, Advocate for the appellants and Sh. H.C. Sharma, JDR for the respondents. I have considered the submissions made before me. I agree with the plea of the ld. Counsel for the appellants that there is no evidence of the conversion of the steel scrap found short into the steel ingots much less there is any evidence of the clearance of the same clandestinely without payment of duty. The Original Authority in his order has not