2014 (7) TMI 617

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..... officers of Income Tax Department searched the factory premises of the respondents. During verification of stock lying in the factory premises, 149.065 MT of finished goods was found short of the stock recorded in the books. On the basis of this information received from the Income Tax Department, it is alleged that the said quantity of 149.065 MT finished goods was removed in a clandestine manner and therefore a proceeding for recovery of duty of Rs. 5,78,380/- was initiated vide Show Cause Notice dated 21.05.2009. The adjudicating authority, vide their order confirmed the recovery of duty of Rs. 5,78,380/- proposed in the said Notice and also imposed equal amount of penalty upon respondents under Section 11AC of the Central Excise Act, 19 .....

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..... rification. Demand cannot be raised in respect of quantity which is not based on actual weightment as held in following cases by Hon'ble Tribunal:- (i) UP Alloys Pvt. Ltd. Vs. CCE Kanpur [2007 (213) ELT 412 (Tri.-Del). (ii) Nilesh Steel & Alloys Pvt. Ltd. Vs. CCE Aurangabad [2008 (229) ELT 399 (Tri - Mumbai)] (iii) Shri Gajanan Re-Rolling Mill Vs. CCE, Nasik [2008 (222) ELT 133 (Tri - Mumbai)] (iv) Shiva Steel Rolling Mills Vs. CCE, Kolkatta-II [2005 (186) ELT 326 (Tri-Kol)] He further observed as under:-              Here I would like to mention that Income Tax authorities had visited the Appellants premises on 16.07.2007 and had noticed the alleged discrepancies of shor .....

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..... n be held to be guilty of clandestine activity. Hence the charge of clandestine removal is not sustainable in absence of corroborative evidence with regard to purchase of raw material, manufacture of finished goods, flow of money or any seizure or statement from purchasers. 3. The Revenue in their Miscellaneous Application again reiterated the same very stand that the report of the Income Tax authorities has to be accepted. I find that apart from that there is nothing on record that the respondents had actually manufactured and removed the goods clandestinely as rightly discussed by the Commissioner (Appeals). The stock verification done by the Income Tax authorities cannot be accepted on its face value in view of the doubts raised by the .....

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