TMI Blog2010 (3) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... stock relating to raw materials, which were bulk drugs were noticed and value of the goods found short was Rs. 6,19,580/- and Cenvat credit availed in respect of the said material was Rs. 1,01,115/-. The Director of the Company was present at the time of stock taking and he admitted the shortage and he stated that he could not explain the reasons for the shortage as he was busy in some other work during the last 3 to 4 months. He gave his opinion that the shortage might be due to pilferage or due to use of the goods in the manufacturing process of the finished goods, which have been damaged and such damaged finished goods having not been accounted for. He deposited the amount equal to the credit taken on 26-11-2005 itself. Show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11AC is not attracted. 4. Ld. SDR submits that the stock taking was done in presence of witnesses and the Director of the Company. No valid reasons have been given by the Director of the Company, who was looking after day-to-day activities of the Company. Under these circumstances, obviously, the raw materials found short were cleared clandestinely and, therefore, the appellant company, which was operating under self-removal procedure is liable to penalty under Section 11AC read with Rule 15(2) of the Cenvat Credit Rules. The Director, who was looking after the day-to-day activities, has to be treated as custodian of the goods and as he was not in position to explain the reasons for shortage, he was also liable for penalty. 5. I ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir failure to do so, they were certainly required to reverse the credit availed by them. In a case where the goods accounted in RG-23, Part-I was not found, certainly a case of irregular maintenance of accounts is also established. However, the allegation of clandestine removal of the goods is a serious one and requires corroborative evidence. No such evidence has been relied upon in the show cause notice. In fact, the extent of shortage though given in absolute terms does not indicate the comparative figures i.e. the stock as per book and the physical stock, which was available. Such an analysis would have shown whether the shortage was significantly high or only marginal. At any rate, the charge of clandestine removal cannot be upheld m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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