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2016 (3) TMI 661 - CESTAT ALLAHABAD

2016 (3) TMI 661 - CESTAT ALLAHABAD - 2016 (335) E.L.T. 97 (Tri. - All.) - Duty demand for alleged shortage in stock - penalty imposed under Section 11 AC - Held that:- Panchanama is silent as to the manner of stock taking. Thus at best, it is a matter of eye estimation made by the inspection team. Thus hold that on the basis of such eye estimation, no conclusion of shortage can be drawn against the appellant. In this view of the matter, the whole proceeding is vitiated. Thus, set aside the impu .....

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alleged shortage in stock amounting to ₹ 17,05,019/- was confirmed and further penalty was imposed of ₹ 15,31,716/- under Section 11 AC of the Central Excise Act, 1944 read with rule 25 (1) of the Central Excise Rules, 2002 and ₹ 1,73,303/- under section 11 AC read with rule 15 of CCR, 2004. 2. The brief facts are that the inspection was carried on by the office of the revenue which started on 6.9.2007 at about 5 PM and ended on 7.9.2007 at about 3:30 AM as mentioned in the Pan .....

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stated that the variation may be due to oversight or clerical error by the dealing person and no other justification or explanation could be offered. Further, the Director agreed to deposit the amount of duty on the shortage. Subsequently, the duty was deposited under the intimation to the revenue. 3. The show cause notice dated 1.9.08 was issued on the basis of the Panchnama drawn on 6th/7th September,2007, as it appeared to revenue that the appellant have cleared goods found short, during phys .....

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as well as purchased ingots which are used in further manufacture of TMT bars. The manufactured ingots are transferred to the ruling section and there, they get mixed with the purchased ingots. Some part of the manufactured ingots are in hot condition and cannot be handled or accounted. Further, some in the furnace of the rolling mill, which are not visible as manufacturing process requires high-temperature in the rolling mill. It was further contended that the Panchnama is silent as to the mann .....

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rtage do not lead to any adverse inference of clandestine removal. It was further stated that the charge of clandestine removal was based on presumptions and have no legs to stand. The SCN was adjudicated and the proposed demand confirmed with penalty under section 11 AC. Being aggrieved the appellant preferred appeal before the learned Commissioner (Appeals) who have been pleased to dismiss the appeal only on the ground that the appellant had admitted the shortage at the time of inspection and .....

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o adverse inference could have been drawn against the appellant in spite of the deposit of tax by the appellant. The ld. Counsel relies on the ruling of the Honourable Allahabad High Court in the case of CCE versus Minakshi Castings: 2011 (274) E.L.T. 180 (All.). The Honourable High Court had upheld the finding of the Tribunal that there is no material or evidence of any kind to support the findings that the assessee had clandestinely removed the goods which did not tally with physical stock. In .....

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