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Commissioner Of Central Excise And Service Tax, Ghaziabad Versus M/s Apollo Pipes Ltd. And Vice-Versa

2016 (3) TMI 612 - CESTAT ALLAHABAD

Stock of finished goods and raw materials found short at the time of physical verification - appellant assessee is in appeal against confirmation of duty whereas the revenue is in appeal against waiver of penalty allowed by the impugned order - Held that:- The manner of stock taking on the date of inspection, have given an approximate figure of the stock and some variation is bound to happen. The question for consideration is whether the variation found is normal calling for no adverse inference .....

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ke note of the fact that the appellant have not protested the deposit of duty pursuant to investigation and maintained silence, till the issue of show cause notice. In this view of the matter reduce the duty confirmed by 50% and further uphold the waiver of penalty by the ld. Commissioner (Appeals). - Decided in favour of assessee in part - Ex Appeal Nos.50683/2014 & Ex Appeal Nos. 50601/2014 - Dated:- 20-10-2015 - ANIL CHOUDHARY, MEMBER (JUDICIAL) For the Petitioner : Shri Ashok B Kulgod, AC (A .....

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ellant assessee is in appeal against confirmation of duty whereas the revenue is in appeal against waiver of penalty allowed by the impugned order. 2. The assessee, M/s Apollo Pipes Limited, is a manufacture of PVC pipes of various grades and sizes and fittings thereof. They are also availing the facility of Cenvat credit on the inputs and capital goods. An inspection was carried out in factory premises on 25.11.10 and 26.11.2010. During the visit, records were examined and physical stock taking .....

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is controlled by Head Office. He makes entries in daily production and dispatch of Register on the basis of daily production and raw materials and consumption report provided to him. The said records are maintained under the supervision of Shri N.S.Rana. Statement of another person, one Mr. Anil Kumar was recorded, who prepared the daily production report and consumption of raw materials and handed over the same to Shri V.P.Sisodia. The Excise officers conducted physical verification of both fin .....

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C pipes and fittings and ₹ 40,438/- on PVC resin. A statement of Mr Rana, the General Manager (Works) was recorded on 26/11/2010 wherein he stated that unit have come into existence in November, 2009 by transfering of plant and machinery from their unit I & II at Sikandrabad which are now closed. The work of production and clearances is monitored by him on day to day basis. As regards the shortage found, he stated that although the calculations have been drawn in his presence but the r .....

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the Books of Accounts. Whereas the appellant has failed to specify the exact reasons responsible for the shortage noticed in the stocks of finished goods and raw materials. Accordingly, it appears that the appellant has clandestinely removed the goods found short at the time of physical stock taking on 26.11.2010 in a manner other than as prescribed in the Central Excise Act, 1944, with intent to evade payment of duty. Accordingly, the appellant assessee contravened the provisions of Rule 4 (du .....

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s. 4. The appellant assessee contested the show cause notice by filing reply dated 5/11/2012. It was urged that at the time of inspection in the statement recorded of Mr Rana, General Manager, it was stated that the reason for shortage may be due to calculation of weight on the average basis of the finished products. It is further stated that there being no allegation or any incidence of clandestine clearance found on the part of the appellant assessee the whole proceeding is bad and fit to be d .....

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assessee cleared the goods under cover of invoice and no circumstances have been found of any clandestine removal. It was further urged that the finished goods produced on physically weighed before the entry in the stock register and similarly every consignment of goods is cleared only after physical weighment of the goods. 5. The SCN was adjudicated vide order in original dated 28.2.2013 and the proposed demand of ₹ 3,43,626/- on shortage of finished goods and ₹ 40,438 on shortage .....

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delete the penalty imposed both under Rule 25 of CCR and Rule 15 of CCR read with section 11 AC of the Act. The ld. Commissioner in his order has observed as follows while confirming the duty - "6.2 As the Appellant has not been able to explain the reasons of shortage in finished goods as well as inputs, duty involved in such shortage is liable to be recovered from them. The above finding finds force from the judgement of the Hon'ble High Court of Madras in the case of Alagappa Cements .....

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lain the said defect in the maintenance of records or the actual availability of stock. 6.3 The department has further alleged the charges of clandestine removal on the goods found short. However, I find there is no positive evidence adduced by the department to prove clandestine removal. The burden to prove removal without payment of duty is on the department. Without corroborative evidence, it is legally untenable to show such removal only on the basis of certain assumptions. The Hon'ble C .....

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any merit in view of catena of judgements in which it has been uniformly held that clandestine removal is a serious allegation which requires to be proved by way of tangible evidence and allegations on the basis of assumptions and presumptions are un-sustainable. The appellant deposited the duty involved on the shortage of finished goods at the time of detection itself that is well before issuance of show-cause notice. Therefore, imposition of penalty equal to the duty involved on the shortage u .....

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as at the time of inspection-average weight of 10 pipes was taken and the same was applied to the approximate number of pipes of finished goods available. Thus, the variation and the discrepancy found, which is about 10% of the finished goods, is normal variation. He further stated that in absence of any instance of clandestine removal, the duty assessed on the same on estimation, is bad and fit to be set aside. So far the raw material - PVC resins is concerned the gross weight found on the dat .....

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