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M/s Shamli Steels Ltd. Versus Commissioner of C. Ex., Meerut I

2016 (5) TMI 606 - CESTAT ALLAHABAD

Clandestine removal of goods - Levy of duty alongwith interest - deposited tax on the stock found short - Appellant contended that valuation of stock was on estimation basis and there is bound to be a variation - Held that:- the method of valuation adopted being in the nature of estimation/approximation, there is bound to be some variation. Further, it is found that the balance difference in the weight of ingots is approximately 10%, which I consider normal variation and no adverse inference can .....

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e. - Imposition of penalty - Rules 25,27 of CER, 2004 read with Section11AC of the Act - Held that:- so far as the penalty is concerned under Rule 26, in absence of any confiscation of goods and in absence of any evidence of clandestine removal except a strong presumption, penalty is set aside. Penalty under Rule 27 is confirmed. - Decided partly in favour of appellant with consequential relief - Ex. Appeal Nos.55864/14 - Final Order No. A/70009/2016-SM - Dated:- 7-1-2016 - MR. ANIL CHOUDHA .....

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2002 along with interest on the alleged clandestine removal of goods found short in the course of stock taking during inspection on 21/22.09.2011 and confirmed by the impugned OIA passed by the Commissioner (Appeals) of Central Excise, Meerut I. 2. Brief facts are that an inspection was carried out in the factory premises. The stock of M.S.TMT Bars, M.S.Angles, M.S.Channel & M.S.Ingot, was verified. For the purpose of physical verification, the inspection officer, with the help of the staff .....

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ce of two tons. In case of MS Ingots, the stock as per book record was 1785.059 MT and the stock physically found was 1560.790 MT, there has been difference and shortage of 224.269 MT. During the course of stock verification, the exercise was started at 9.15 hours on 21.09.2011 and ended at 2.05 hours on 22.09.2011. Regarding the manner to be adopted for stock taking of M.S.Ingots, the statement of Shri Ritesh Jain, Authorized Signatory was recorded, wherein he stated that he is satisfied with t .....

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balance was paid through PLA Account. Subsequently, show-cause notice dated 08.10.2012 was issued, as it appeared to Revenue that the appellants have removed finished products, namely, MS Ingots, MS TMT Bars valued at ₹ 62,79,532/- and 1,25,36,544/- respectively clandestinely, with intent to evade the payment of duty and did not pay duty leviable thereon and did not pay duty on the goods removed clandestinely and further did not enter the removed quantity in the relevant record and also di .....

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n11AC of the Act. 3. The appellant contested the show-cause notice stating that the valuation of stock was on estimation basis and there is bound to be variation. In such circumstances, no case of clandestine removal is made. The appellant further contended that there are two independent shed in the factory, one is for ingot furnace and the other is for rolling mill. They manufacture ingot and also purchase the same, which are kept separately. When the manufactured ingot are transferred to re-ro .....

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chanama, the lying and countable ingots in the factory was 14189, and 500 ingots having the approximate weight was lying in the hot rolling mill furnace. Thus, as per Panchanama, the total ingot was 14689 having the weight of 1615.790 MT while at the time of preparation of Annexure A the weight is wrongly mentioned as 1560.790 MT. Thus, the actual difference is 169.269 MT instead of 224.269 MT. However, only actual weight of sample bundles was taken and thereafter, the stock was counted and mult .....

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m near to cooling bed, of different size and manual bundling was in process. Thus, the loose MS bars, which also formed part of the stock, were not considered at the time of verification. This fact was also pointed out at the time of inspection. It was also pointed out that the error in weighted sample bundles is also not ruled out as the weightment was done on weigh-bridge, having the capacity of 60,000 Kg., when the weight of bundle is 88 kg. to 94 kg. It is further stated that in such matter, .....

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eal observing that the contentions of the appellant as regards method of stock taking are not tenable as the stock of the goods was valued with their assistance and it is the appellant who has to satisfy the Revenue about difference quantity of stock. As regards the contention regarding limitation that the extended period is not attracted, The inspection was done on21/22/09/2011, whereas show-cause notice was issued after more than one year on 08.10.2012. It was observed that the un-explained sh .....

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is bound to be difference and the ld.Commissioner (Appeals) have erred in treating adverse conclusion under the presumption that there is clandestine removal. At the time of inspection, the various persons have stated that some variation is bound to be there as they issued inventory for production on the basis of counting of the ingots, whereas stock is calculated by weight. It is further urged that the variation explained to the extent of 56 MT in the stock of ingot, thereby lead to net discrep .....

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n the similar circumstances of stock taking, where physical verification was done by taking average weight of a sample or bundle of goods and then multiplied number of pieces of the relevant items, held on such basis only on average estimation and such method of stock taking can only lead to a suspicion of shortage, but cannot be a substitute for proof of shortage, unless the Department is in a position to clearly demonstrate the fact of shortage through actual physical weighment of entire stock .....

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that there was a vast difference between physical stocks available and that shown in RG 23A Part I Register. The Managing Director had admitted that the actual physical stock of inputs and entries in the Register, did not tally because the assessee had removed the modvatable inputs for sales and warranty replacements. Further, shortage was admitted and stated, due to reason that their Office Assistant, who was maintaining their books of accounts, was only a matriculate and being a non-technical .....

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st mistake committed in maintenance of stock register etc. was admitted by the Managing Director of the respondent assessee and in absence of any willful mis-statement, fraud or suppression of facts, the extended period of limitation is not attracted. Accordingly, he prays for allowing the appeal. 7. The ld.A.R. for the Revenue relies on the impugned order. He further states that the competent person or the authorized signatory of the appellant, have expressed satisfaction at the time of inspect .....

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