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2016 (3) TMI 194 - CESTAT CHENNAI

2016 (3) TMI 194 - CESTAT CHENNAI - TMI - Stock discrepancy warranted enhancement of demand plea of the appellant that stock taking was done in dark is false when there was thread bare examination of the evidence made - Held that:- Adjudicating authority shall first deal with the outcome of the physical inventory,and outcome of the hard disk of the computer. Secondly,the outcome of the loose slips shall be examined in detail to arrive at the proper duty demand if any, to serve the interest of ju .....

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a shall determine dutiability if any. Therefore, the authority shall independently apply his mind without being guided by the appellate finding of lower appellate authoritywho made partial remand of the matter.

So far as the second show-cause notice is concerned, if that is different from the first show-cause notice, the authority shall properly deal with that independently or in combination with the first show-cause notice. He has to clearly bring out the status of each show-cause no .....

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plain on the outcome of the search. The first show-cause notice dated 02.09.2010proposed a demand of ₹ 12,60,211 on the allegation that the raw materials of Unit - I were transferred to Unit - II and Cenvat credit thereon was taken without the input being utilised in manufacture of dutiable goods, for which, Revenue has suffered loss. However considering the defence plea and evidence the demand proposed by the said so cause notice was reduced to ₹ 7,60,135/-. 2.1 The second show-caus .....

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examining the defence plea as well as the allegation in the show-cause notice reduced the demand to ₹ 1,61,490/-. 3.1 It was submittedby the learned counsel for the appellant that the allegation of no use of the raw material to manufacture finished goods is baseless. The first show-cause notice proposing the demand was based on a presumption of shortage of raw materials found in the course of physical examination of stock. With such allegationsearchparty seized computers of the appellant .....

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pellant explained that the documents seized are in possession of the department and the contents thereofalthough is verifiable with the outcome of the computer record to establish whether there is stock discrepancy, the authority failed to make verification. 3.3 Further plea of the appellant was that all the pleading of appellant made at all timeswere not at all examined by lower authority. Appellant in para 11 (8) of his reply to show-cause notice [copy available at pages 93-126 of the appeal f .....

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490/- because there was no clandestine removal of either finished goods or raw material at all and no evidence was adduced by Revenue against appellant to prove such allegation. 3.4 The ultimate prayer of the appellant was that if the matter goes back to the learned Adjudicating Authority to re-examine theoutcome of the computer records with the defence pleadings, entire controversy would be resolved.Therefore that Authority without being guided by the order of the Commissioner (Appeals) who act .....

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isethe balance demand evaluating the evidence gathered, result of physical stock taking, outcome notebook seized and oral and documentary evidence gathered in the course of search.So also 36 number of loose slips found in the course of searchwere examined.Para 6 of his order demonstrates that the stock discrepancy warranted enhancementof demand due to proper allegationmade in the show-cause notice based on evidence.Considering Revenue was prejudiced, he ordered partial remand of the matter. 4.2 .....

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every allegation and noticed that the raw material were transferred from one unit to anotherclandestinely removing the same for which appellant was liable to adjudication consequences. 5.2 It was explained by Revenue that the plea of the appellant that stock taking was done in dark isfalsewhen there was threadbare examination of the evidence made. Similarly, when the notebook seized in the course of search along with oral evidence demonstrated that the appellant removed the goods without using t .....

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o doubt, there were three contributing factors to the adjudication.The first is the outcome of the inventory made in the course of search to both the premises on 15th and 16thJuly, 2008. There is a material on record to show that the appellant challenged inventory taken on that dayon the ground that was taken in darkness due to no power supply.There appears a communication dated 28.07.2008 of the appellant in that regard objecting to the act of search party. That is on record.Therefore thatdeser .....

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, that shall be reconciled with the physical inventory of stockfigure. The discrepancy, if any, arising out of such reconciliationshall be explained by the appellant. On hearing the appellant on that count, the authority shall pass appropriate order. 7.3 Thirdly,so far as the oral evidence and documentary evidences are concerned, those are certainly the evidence properly gathered in the course of search and can be utilised in the adjudication subject to opportunity of rebuttal.The notebook, whic .....

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