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2017 (12) TMI 83 - AT - Central ExciseClandestine removal - inputs - diversion of stock - physical verification - Held that: - the Learned Commissioner have erred in selectively relying on the evidence on record, leading to erroneous conclusion. We find that no discrepancy was found in the stock of raw materials on physical verification. Further, the variation found in the stock of armchair is only 7.3%. Chairs without arm is only 0.8%, PCC crates differences 3.4%, plastic scrap differences 1.74%. Thus, these variations are very small and are attributable to the normal variation in physical stock taking calling for no adverse inference. Further, the variation in respect of baby chairs is 10%. The appellant gave a cogent explanation that during inspection, when the physical verification of stock was done, the same was done at a hurried pace leading to error in counting. That chairs with and without arms in total are about 8% more. Whereas baby chairs are less by 10%. Thus, there being equivalence in the difference, ipso facto explains the error in physical stock taking. Diversion of raw material - shortage of stock - Held that: - the appellants have made payment for such inputs through the banking channel. Further, other than bald allegation. There is no evidence of diversion of the raw materials. The reliance placed on the statement of the security guard is also misplaced as he had categorically stated that the ‘Vahan Register’ was being maintained by them at their sweet will and also there was no proper system of recording. Other security guards during the other shifts may not have always recorded the entry of trucks in the said Vahan Register - Revenue have disputed 84 invoices/transactions and have disputed the vehicle numbers with respect to 3 - 4 vehicles/invoices. We hold that such minor error cannot lead to drawing of adverse inference under the fact that the Learned Commissioner have not disputed the production of finished goods and the clearance on payment of duty. Further we find that there is no allegation in the show cause notice that the appellants have acquired raw material – PP granules from some other source. We further find that there is no finding as to flow back of cash to the appellants. The statements recorded in the course of investigation, reliance on which have been placed by the Learned Commissioner, are not reliable in view of non-observation of the condition precedent in Section 9D of the Central Excise Act. We further find that the transporters have also supported delivery of the inputs in question to the factory of the appellants. Further, the supplier of raw material, namely, the proprietor of M/s JK Enterprises have also supported the delivery of the raw material being disputed by Revenue. We further hold that discrepancy, if any found in the records maintained by the transporter cannot lead to adverse inference against the appellant – manufacturer. Appeal allowed - decided in favor of appellant.
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