2017 (10) TMI 1118 - AT - Central Excise

Clandestine removal of finished goods and raw material - shortage of stock - stock taking done on the basis of eye estimation - Held that - in the case of plastic pipe, as per records, it was shown the stock of 3860 Kg where as on physical verification stock was found nil. For that, no clarification was given by the Ld. Counsel for the appellant although stock taking has been done on eye estimation basis. As a particular item is having nil stock, in that circumstances, the charge of shortage and clandestine removal stands proved. For rest of the demand the revenue failed to prove that the goods found short as stock taking has been done on eye estimation basis. In that circumstances, the rest of the demand is set aside. Appeal allowed in part.

Summary

Issues: Alleged clandestine removal of finished goods and raw material; Stock taking based on eye estimation basis; Admissibility of shortage of goods; Imposition of duty, interest, and penalty.

In this case, the appellant appealed against an order confirming the demand for duty on alleged clandestine removal of finished goods and raw material. A search conducted at the factory premises revealed shortages of materials, leading to the initiation of proceedings against the appellant. The appellant contested the demand, arguing that stock taking was done on an eye estimation basis, making the allegations unsustainable. The appellant's counsel relied on a Tribunal decision to support this argument. The Revenue, however, contended that the appellant admitted shortages and paid duty, indicating clandestine removal. After hearing both parties, the Tribunal examined the investigation panchnama, noting discrepancies in stock levels, particularly with plastic pipes. Despite the eye estimation basis, the Tribunal found the charge of shortage and clandestine removal proved for plastic pipes, confirming a demand of duty and imposing a penalty. For other goods, where the Revenue failed to prove shortages due to the eye estimation basis, the demands were set aside. The appeal was disposed of accordingly.