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2016 (2) TMI 200 - CESTAT KOLKATA

2016 (2) TMI 200 - CESTAT KOLKATA - 2016 (337) E.L.T. 119 (Tri. - Kolkata) - Clandestine removal - whether shortages suggested by the statutory auditors of the Respondent, based on test check, can be made the basis for clandestine removal? - Held that:- There is no evidence with the Revenue that the re-conciliation done by the Respondent is incorrect. There is force in the argument of the Respondent that finished goods can not be both short & excess and that such a situation can be only due to w .....

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ed only upon the statutory auditors of the Respondent made on test check basis. Accordingly, appeal filed by the Revenue is rejected - Decided in favour of assessee - Appeal No. E/405/2007 - ORDER No. : FO/A/75114/2016 - Dated:- 5-1-2016 - DR. D.M.MISRA, HONBLE MEMBER (JUDICIAL) SHRI H.K.THAKUR, HONBLE Member(TECHNICAL) For the Petitioner : Shri A.K. Biswas, Suptd (AR) For the Respondent : Shri Ravi Raghavan, Advocate ORDER PER SHRI H.K.THAKUR This appeal has been filed by the Revenue against .....

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tory auditors of the Respondent. It is the case of the Revenue that Respondent can not deny the shortages of stock detected by their own statutory auditors. Learned AR relied upon the following case laws in support of Revenue s. Appeal: (i) Bharat Plast Vs CCE Valsad [2004 (168) ELT 2004 (Tri-Mumbai)] ii) Majestic Auto Vs CCE Gaziabad [2004 (172) ELT 0391 (Tri-Del.)] 3. Sh. Ravi Raghavan (Advocate) appearing on behalf of the Respondent argued that stock taking done by their Auditors is based onl .....

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. That a report of their auditors, suggesting shortages on the basis of test check, does not indicate any clandestine removal which is nothing but a case made by Revenue on presumption & assumption. He relied upon the following case laws. (i) Oudh Sugar Mills Ltd Vs UOI [1978 (2) ELT (J172) (SC)] (ii) Maruti Udyog Ltd. Vs CCE, Delhi-III [2004 (173) ELT 382 (Tri- Del.)] (iii) CCE Vs Maruti Udyog Ltd. [2010 (262) ELT 180 ({P&H)] (iv) CCE Vs Maruti Suzuki India Ltd. [2015 (319) ELT 549 (SC) .....

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7 where such wrong recording of codes was argued by the Respondent and have been considered by the Adjudicating authority. That main buyers of the insulators manufactured by the Respondent are National Thermal Power Corporation Ltd (NTPC), Power Grid Corporation of India, various State Electricity Boards etc. who being Govt. departments/corporations can not be expected to procure clandestinely removed insulators. 3.2. Learned Advocate also made the bench go through Para- 9.5 of the order-in-orig .....

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ory auditors of the Respondent, based on test check, can be made the basis for clandestine removal. Revenue has strongly argued that shortages are detected by the statutory auditors of Respondent and there has to be clandestine removal only. On the other hand Respondent has argued that the shortages were suggested by their auditors, based on a test check, which as per Para- 9.5 of the adjudication order dt. 30/3/2007 included both excess & shortages. It is also observed from Paras-7.5 & .....

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at goods have been cleared clandestinely which is based only on presumptions & assumption. Secondly no duty can be demanded on semi finished goods. It is also not the case of the Revenue that shortages of finished goods suggested by the auditors was finally accepted by the Respondent in their balance sheet for the relevant financial year. The case laws relied upon by the Revenue are not applicable for more than one reasons. Firstly shortages are not detected by the departmental officers duri .....

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gested by the statutory auditors of the assesses. 4.1. There is also a force in the argument of the Respondent that even if the shortages suggested by their auditors is taken to be true, then also the same is required to be ignored as per the case law CCE Vs Maruti Udyog Limited (Supra) as the shortage represents only 0.29% of the total production of the Respondent. 4.2. It is further observed that no evidence whatsoever exists that any excess raw material was procured by the Respondent or was f .....

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