TMI Blog2015 (10) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any such corroboration the assessee's plea on the non-sustainability of order reversing credit or demanding duty has strong force and is to be admitted. Accordingly, we find the reversal of credit on the raw material and the demand of duty on the finished goods solely on the ground of physical stock taking done by the assessee is not sustainable in the facts and circumstances of the present case. - physical inventory was in fact done by the assessee and the Revenue came into the picture much later. In any case, the nature and possibility of accounting error not being denied the adjustment as ordered by the Commissioner on the clear reasoning cannot be faulted. We find that remand of the case on this ground will not serve any purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess found during stock taking and ordered reversal of Cenvat credit of ₹ 28,71,823/- in respect of inputs found short and demanded duty of ₹ 2,39,048/- on the finished goods found excess. Aggrieved by this order of the learned Commissioner, both the assessee as well as Revenue are in appeal before us. 2. The assessee appeal is to the effect that in large scale operation of inventory management these shortages and excesses in both raw material and finished product cannot be eliminated and such shortage/excess which are very small compared to the volume and complexity of operation cannot legally lead to a conclusion of clandestine clearance resulting in irregular credit or non-payment of excise duty. The assessee pleaded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e large scale operation and complexity of accounting. Such shortages and excess are well within the reasonable limit and as long as there is no allegation or evidence to the effect that there is an unaccounted clearance there could be no question of short levy or reversal of credit on goods. 3. The Revenue is on appeal against the impugned order on the ground that the learned Commissioner should not have allowed adjustment of shortage of raw material and finished goods against excess found during stock taking. He should have got the matter verified by the officers to the effect that whether such adjustment has actually taken or not. The Revenue also pleaded that the Commissioner erred in not confiscating the finished goods found in exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumption of raw material goods which are used in process of making and the finished goods are not physically numbered and accounted on day-to-day basis. The standardized system of accounting based on measurement and conversion of raw material to finished product on weight/length basis is fed to the computer. The assessee undertakes with the help of cost auditor stock verification on annual basis to reconcile the inventory position. In such a situation it is but natural that minor variation (0.5% and below) do occur during reconciliation. The explanations provided by the assessee during the original proceedings have been accepted by the lower authority and he allowed the possibility of shortages and excesses in respect of various individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods solely on the ground of physical stock taking done by the assessee is not sustainable in the facts and circumstances of the present case. 6. On the appeal filed by the Revenue against Commissioner's order of allowing adjustment of shortage with excess, we find the lower authority has given a detailed reasoning with illustrations in paras 40, 41 and 42 of the impugned order. The Revenue's plea is that verification should have been done by the officers before the Commissioner allowed such adjustment. We find that the physical inventory was in fact done by the assessee and the Revenue came into the picture much later. In any case, the nature and possibility of accounting error not being denied the adjustment as ordered by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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