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2015 (3) TMI 1139 - CESTAT NEW DELHI

2015 (3) TMI 1139 - CESTAT NEW DELHI - 2015 (329) E.L.T. 511 (Tri. - Del.) - Shortage in stock of finished goods - Held that:- As find that the finished goods have been not physically counted but the stock taking was done on average basis. It is not the accurate and authentic method to ascertain the weight of the physical stock lying in the factory. There is every chance of the error creeping of such weighment. Verification carried out by the officer, being based on eye estimation is not reliabl .....

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tock has been counted physically. Further, I have seen the raw material is in the stock register as on 17-7-2009 is 1258.935 MT against recorded stock as 1375.235, therefore, the shortage of works out to 608.935 MT of raw material instead of 725.235 MT. In these circumstances, the impugned order is modified to demand duty on shortage of raw material of 608.935 MT. With these observations, the matter is sent to the adjudicating authority to quantify the actual amount of duty payable by the appell .....

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ds, i.e., M.S. Ingots was found short to the tune of 116.2 MT whereas the actual stock was found of 52.71 MT, but it was found recorded in the books as 168.91 MT. Further, the raw material i.e., sponge iron was also physically counted and against the total stock has shown as per the records as on 17-7-2009 as 1375.235, the actual stock was found 260 MT. There was shortage of 725.235 MT. On the basis of these shortage, a show cause notice was issued to the appellant which was adjudicated and dema .....

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the appeals are preferred against the same order therefore, they are taken up for consideration together for final disposal. 4. The ld. Counsel for the assessee submits that the stock of finished goods was done on eye estimation basis. Therefore, the ld. Commissioner has rightly dropped the demand on finished goods. He further submits that while taking the stock of raw material on 17-7-2005, the recorded balance in the books of accounts was 1375.235 MT was only on 14-7-2009. But on 17-7-20 .....

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ortages at that time. Therefore, the impugned order was dropping the charge of shortage of finished goods be set aside. 6. Heard the parties, considered the submissions and perused the impugned order along with Panchnama. 7. On going through the Panchnama and the impugned order, I find that the finished goods have been not physically counted but the stock taking was done on average basis. Therefore, the ld. Commissioner (Appeals) in impugned order has observed as under : On the issue o .....

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elevant portion of the Panchnama reads as The Officers requested Shri Tarun Singhal to get the stock of M.S. Inguts physically verified. It was stated by Shri. Tarun Singhal that all the ingots being almost of identical dimensions the total stock can be ascertained by way of counting the total number of ingots and multiplying the same with the average weigh of one ingot taken on actual weighment of 10 ingots lifted randomly from different stacks. The total number of M.S. ingots was found to be 5 .....

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hment. I find that a similar issue of demand of duty on the alleged shortage in stock of the goods arrived on the basis of average or estimated weighment arose in the case of (A) K.L. Steels Ltd. v. CCE, Meerut, 1998 (100) E.L.T. 406 (Tri), (B) Micro Forge (I) Pvt. Ltd. v. CCE, 2004 (169) E.L.T. 251 (Tri), (C) Satspushp Steels (P) Ltd. v. CCE, Jaipur, 2006 (196) E.L.T. 105 (Tri. Del) (D) Simplex Castings (P) Ltd. v. CCE, 1994 (72) E.L.T. 585 (Tri) and in all these cases, the Hon ble Tribunal hel .....

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hentic method to ascertain the weight of the physical stock lying in the factory. There is every chance of the error creeping of such weighment. Verification carried out by the officer, being based on eye estimation is not reliable. Hence, the demand of duty raised on the shortages determined on the basis of the eye estimation is not sustainable. 8. Therefore, I do agree with the observation of the ld. Commissioner (Appeals) that the stock taking of finished goods was done on eye estimation .....

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