TMI Blog2012 (2) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... both the Members) of clandestine removal of the goods, the appeals are required to be allowed - appeal allowed - decided in favor of assessee. - E/877-879/2005 - Final Order Nos. A/359-361/2012-WZB/AHD - Dated:- 20-2-2012 - Ms. Archana Wadhwa, Member (J) and Shri B.S.V. Murthy, Member (T) Third Member on Reference : Shri M.V. Ravindran, Member (J) Shri Mayur Shroff, Advocate, for the Appellant. Shri D.S. Negi, SDR, for the Respondent. ORDER [Order per : B.S.V. Murthy, Member (T)]. - During the surprise visit of the appellant s factory, the officers verified physical stock and compared with the stock which should have actually been there on the basis of calculation of Inputs received, goods manufactured and cleared, and balance stock available and found that there was a shortage of stock of final products involving Central Excise duty of ₹ 10,87,514/- on the goods found short. 2. Heard both the sides. Ld. Advocate on behalf of the appellants submits that duty demand has been made on the basis of statement of the partner and their employee recorded after the visit of officers. He submits that employee Shri Thakur Fateh Singh Ram Singh admitted me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total stock of which should be available on 25-8-1996 114297.400 Kgs Stock found physically on 25-8-1996 60593.000 Kgs Shortage of stock found 53704.400 Kgs It has also been stated in order-in-original that the authorized signatory had stated that there can be following type of losses : 4% on copper wire scrap, 1% on copper rods, 40% on cable wire. While giving details of defence submissions, adjudicating authority had also reproduced the calculation given by the appellants which reached the conclusion that actual shortage was 28,799 Kgs. The sum and substance of the facts discussed above is that the appellants also did not dispute that there was shortage in the stock and the same had indeed been removed but the dispute is only about the quantity. We find that original adjudicating authority has not given any reason for not considering the worksheet given by the appellants. Even the calculation made in the statement drawn up by the officers did not have clarity. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply filed by the assessee before Commissioner, which stand reproduced by him. While giving the details of such calculation, the assessee has specifically contended that, even assuming that figures of stock were correct, the shortages arrived at were erroneous as manifest from the following position. Again below the table so reproduced in the order, the appellants have contended as under : That, it was thus manifest that the shortage was arrived at an arbitrary basis and consequently the allegation of clandestine removal of 53704 Kgs. was erroneous and unjustified. That, the entire stock taking activity exercise had been conducted in an arbitrary and casual manner and the physical balance had been arrived at summarily without taking into account the materials which was in furnace at the time of visit of the officers. Thus, the show cause notice deserves to be quashed as unsustainable. 6. Even in the subsequent paragraph, they have contested the allegations of clandestine removal by submitting that the same have been levelled on the basis of hypothetical and arbitrary figures of percentage loss, without any sound corroboration of documentary evidence. They have specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber (Technical) or the appeal is to be allowed as held by the Member (Judicial). 8 . [Per : Archana Wadhwa, Member (J)]. - Vide order No. M/1450-1452/WZB/AHD/2008, dated 18-12-2008, following difference of opinion was recorded :- DIFFERENCE OF OPINION Whether the matter is to be remanded for re-calculation of the duty demand against the appellant as held by Member (Technical) or the appeal is to be allowed as held by the Member (Judicial). 9. The registry was directed to place the above difference of opinion before the Hon ble President for nomination of Third Member to decide the difference. Hon ble President in his order dated 12-8-2010 has directed the Bench to reformulate the difference of opinion by observing that two Members cannot refer the entire appeal because of difference of opinion instead of making a statement referring the point or points of difference between them. Accordingly, the difference of opinion is being reformulated as under :- DIFFERENCE OF OPINION (i) Whether finding of clandestine removal can be upheld on the basis of input-output ratio of raw materials and final product. (ii) Whether the plea of the appellant that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis for upholding the findings of clandestine removal. (vi) Whether, in the facts and circumstances of the case, the matter is required to be remanded for recalculation of duty as held by Member (Technical) or appeals are required to be allowed as held by Member (Judicial). 12. Ld. Counsel appearing on behalf of the appellant would submit that the order recorded by Hon ble Member (Judicial) is to be accepted. It is his submission that the shortage of the stock of inputs as found out by lower authorities on the day of inspection was based upon the calculations of input-output ratio. It is his submission that such calculation cannot be made a basis to come to conclusion that there was clandestine manufacturing and removal of the goods. It is his submission that the first appellate authority as well as adjudicating authority has relied upon the statements of the partners to hold that there was a clandestine manufacturing and removal of the goods, but it is not the factual position and doesn t reflect from the correct position and hence the statements needs to be discarded. It is his submission that the calculations based upon the input-output norms is totally incorrect and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wastages and burning losses that may arise. It is his submission that if input are not challenged then the shortage of raw material stock as calculated is not properly explained and suspicion is created that there is a shortage of input, itself would indicate that there was something wrong in the factory premises of the appellant. 15. I have considered the submissions made at length by both sides and perused the records. 16. On perusal of the Order-in-Original and Order-in-Appeal, I find that the appellant has taken a consistent stand before both the lower authorities that the burden of proof as regards allegation of clandestine removal is on the Department. It is seen from the records that the entire charge of clandestine removal of the finished goods is based upon the theoretical working of calculating the consumption of inputs and presumptive clearance of the finished goods from the factory premises of the appellant. The assumptions which have been considered by the Revenue authorities are totally faulty inasmuch as that the charge of clandestine removal is first to be established based upon the clandestine manufacture and removal of the goods. In the instant case, except ..... X X X X Extracts X X X X X X X X Extracts X X X X
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