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2020 (12) TMI 811 - CESTAT KOLKATAClandestine removal - finished goods found short during the stock taking - Department was also of the view that N/N. 67/95CE dated 16-03-1995 was not applicable to the Appellants since it applied only to ‘inputs’ which are captively consumed and not to ‘finished goods’ as was the case of the appellants - demand is time barred as the show cause notice has been issued on 15.09.2016 for the alleged clearances in 2012 - time limitation - HELD THAT:- The charge of clandestine clearance cannot stand as the department has not been able to provide clinching evidence in support of the same. Clandestine clearance is a serious charge and has to be proved with positive evidence which is lacking in this case - It may be noted that not even one buyer of the clandestinely cleared goods has been identified by the department. Shortages detected during stock-taking - whether the shortages detected were real or only notional. The appellants have doubted the manner of stock taking itself as it was not done in the presence of any panchas and no panchnama was drawn? - HELD THAT:- The appellants have been saying right from the investigation stage itself that the shortages were because of minor weighment errors which had accumulated over the years since no stocktaking had been done right from the date of production of those items. The shortage, when compared to the total production over the years, comes to a very nominal percentage as indicated in para 6.3 above. This has not been contested by the department. Such nominal percentage differences are to be expected while weighing, keeping the nature of the products in mind which are not amenable to precise weighment - the shortages noticed are not actual but only notional and, hence, no differential duty is payable. DI pipes - appellant’s consistent stand has been that the shortages were because of damaged pipes which were reissued for re-melting in the factory itself but inadvertently not reduced from the recorded stock of DI Pipes - HELD THAT:- These damaged pipes were all recorded in the Daily Stock Account of Scrap and also reflected in the ER-1 returns. Further, since these were captively consumed they were exempt from duty under notification 67/95-CE dated 16.03.1995. The Commissioner’s finding that the exemption does not apply to ‘finished goods’ is legally not sustainable because of the specific definition of ‘inputs’ in the said notification which covers virtually all excisable goods including the goods manufactured by the appellants. Time Limitation - HELD THAT:- The whole demand is time-barred as the shortages were noticed in December, 2012, and the show cause notice has been issued on 15.09.2016. There is no ground made out by the department to justify invoking the extended time period. Appeal allowed - decided in favor of appellant.
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