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2016 (5) TMI 1196 - CESTAT ALLAHABAD

2016 (5) TMI 1196 - CESTAT ALLAHABAD - 2016 (335) E.L.T. 316 (Tri. - All.) - Clandestine removal of goods - Shortage of quantity of MS ingots and MS bar - Demand of duty and imposition of penalty - Section 11 AC of the Act - Contravention of provisions of rules 4, 6, 8, 10, and 11 of the CER 2002 - Held that:- it is found that there is discrepancy in the manner of stock taking. Such manner of stocktaking can give only an estimation and an approximate result. Based on such an approximate calculat .....

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tax does not amount to admission on the part of the appellant. The appellant have neither shown or admitted clearance in the subsequent returns and nor have admitted any clandestine removal categorically. On being questioned, pointedly for the alleged shortage it was stated by the Director, the production figures are reported by the person who is not much educated and as such there are discrepancies due to inadvertence. It further found that revenue have not brought any incidence or corroborati .....

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eal is against order in appeal dated 20/7/2010 passed by the Commissioner of Central Excise appeals, Allahabad. 2. The brief facts are that there was an inspection in the factory of the appellant on 18/6/2008 which continued to 19/6/2008. The inspection team inpected the records and stock of raw materials and finished goods in presence of the director and two independent panch witnesses. During the inspection the stock of finished goods of MS ingots and MS bar was found to be huge, and Actual we .....

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S ingots was found to be 433.931 MT (3973 X 109.22 KG). Similarly average weight of one bundle of MS bar was found to be 99.20 KG multiplied with 24,639 bundles and added with the weight of loose bars lying scattered was found to be 2449.680 MT (24639 x 99.20+5490 KG). There was no clearance of finished goods on the date of visit. The stock so estimated was compared with the opening stock on 18/9/2008 and discrepancy or shortage was found as follows: Commodity Opening Balance of finished goods a .....

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d that when the Director, Mr.O. P. Jalan, was questioned regarding the shortage, who was present during the process of checking, could not explain it and admitting the shortage agreed to pay the duty thereon, as is mentioned in the Panchnama drawn recording the proceedings of the inspection. The statement of the director-Mr O.P.Jalan was recorded on the spot on 19/6/2008 wherein he interalia expressed satisfaction as to the manner of stocktaking. Further on 19/6/2008 the appellant deposited S .....

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tion and stock figures are bound to vary on actual weighment. He admitted the contents of his statement dated 19/6/08. It appeared to revenue that in absence of cogent explanation the appellant have surreptitiously cleared the final products found short without payment of appropriate duty and without observing the mandate of law and have suppressed the fact of such removal with intent to evade payment of duty. Accordingly, the appellant was required to show cause as to why proposed demand be not .....

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to reject the appeal observing that the stocktaking was done in presence of the director of the appellant and accordingly no shortcoming pointed out subsequently is entertainable. The Director has, in the statement, recorded at the time of inspection admitted the shortage. Although the appellant had after a day or two of the inspection, raised the objection as to the method of valuation, raising doubt as as to the correction of the method and also prayed for the revaluation. But in the subseque .....

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on 19/6/08 at about 4 AM. Further the calculation sheet annexed to the panchnama, for verification of stock states that average weight of one MS ingot was assertained after weighment of four bundles and thereafter the said weight was multiplied with the number of ingots and accordingly the stock was assessed at 433.91 MT. Similarly, for ascertaining the stock of MS bar average weight of one bundle of MS bar was ascertained at 99.20 KG and the said weight was multiplied with the number of bundle .....

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y given, where the person giving the statement is tired and deprived of sleep. He further urges that this manner of stocktaking has got no legal sanction having probability of errors and is only an approximate estimation. Based on such estimation it cannot be conclusively said that that is discrepancy and shortage in the stock. It is further urged that the appellant have no where admitted any clandestine removal by them. It was also stated that the person reporting the production data in the fac .....

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ng any justification for the same. It is also stated that MS ingots are of different sizes and weight. The weight varies between 106 to 147 Kgs. as MS ingots are not homogeous in shape and size. For that the weight also depends upon the cross-section of ingot which varies widely from one ingot to the other. Further, MS Bars were of different diameters such as, 10 mm, 16 mm, 20 mm and 25 mm. Thus, if MS Bars are cut to same size, still the weight is bound to vary. It is further urged that less th .....

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ing clandestine removal. The said ruling was confirmed by the Hon'ble Supreme Court in 2008 (222) ELT A133. Reliance is also placed on the ruling of the Hon'ble Allahabad High Court in the case of CCE Vs. Star Steels: 2015 (315) ELT 495. Under the fact that the stock which was found in the premises of the assessee, 581 MT and there was no actual measurement or weighment while determining as to whether there was any excess stock. Further exercise appears to have been carried out on the ba .....

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held that without evidence of clandestine removal, no penalty can be imposed for shortage of finished stock. Accordingly, the appellant prays for setting aside the impugned order with the grant of consequential relief. It is also urged that at the stage of production, ingot is in hot and molton condition and as such production is recorded on estimation basis. The Actual weighment is done only at the time of sale/clearance. 7. The ld.A.R. for the Revenue relies on the impugned order. 8. Having c .....

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