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2016 (6) TMI 227 - CESTAT NEW DELHI

2016 (6) TMI 227 - CESTAT NEW DELHI - 2016 (337) E.L.T. 473 (Tri. - Del.) - Central excise duty evasion on yarn by way of unaccounted clearance - shortage of excisable goods - Held that:- As decided in Commissioner of Central Excise & Service Tax , Ludhiana Vs. Anand Founders & Engineers (2015 (11) TMI 1166 - PUNJAB & HARYANA HIGH COURT ) clandestine removal cannot be established only on the basis of shortage of materials detected at the time of stock taking by the officers. Mere shortage detect .....

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could have brought out the truth of the correct stock clearly. Appreciating the available evidence in the case, the demand of central excise on account of clandestine removal solely based on the alleged shortage of excisable goods cannot be sustained. - Mis-match between the entries in the log book of the packing department and entries in the RG-I - Held that:- As already noted, 7 out of 14 entries indicate higher quantity of production entered in the RG-I when compared to the log book in th .....

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erials, for alleging clandestine removal of excisable goods without entering in the records, corroboration is required to support such allegation. In the present case, there is absolutely no corroboration and the demand is made only on the basis of certain comparison between a non-statutory record maintained for packing materials and the entries in the statutory records, RG-I. Find that no corroboration of any nature has been brought out by investigation to support the allegation of clandestine .....

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he same order-in-appeal and are accordingly taken up together for disposal. 2. The brief facts of the case are that the appellants are engaged in the manufacture of cotton yarn and polyester yarn of different counts liable to central excise duty. Officers of Central Excise, Jaipur conducted physical stock verification in the premises of the appellant on 27.09.2001. Upon finding certain excess as well as less quantities of different types of yarn, further investigations were conducted. Proceeding .....

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, Managing Director of the appellant company. On appeal, the Commissioner (Appeals) passed the impugned order upholding the original order. Aggrieved by this order, the appellants filed these appeals. 3. Ld. Counsel for the appellants submitted that the demand against the appellant company was in two parts. A portion of the demand relates to central excise duty payable on yarn found short during physical verification and the second portion of the demand relates to duty on yarn, which was not acc .....

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ortage in respect of certain types of yarn as found during physical verification and admitted by the Excise Incharge of the appellant company. 4. Ld. Counsel emphasized that Shri Burad in his statement dated 27.09.2001 has never admitted any clandestine clearance of the dutiable items. He only signed the mahazar and admitted to the correctness of shortage /excess as recorded in the mahazar. He retracted his statement in the morning of the next day 28.09.2001 and sent his retraction to Divisional .....

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ty demand, ld. Counsel submitted that the said demand was solely on the basis of a log book maintained for packing materials. The department has taken the log book register of Packing Department to allege that certain quantity of yarn was not recorded in the RG-I register and were cleared without payment of duty. It is the case of the appellant that, as revealed in the data given in Annexure-B to the show cause notice, the department only took the difference, if any, between the log book in the .....

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he packing material log book is not the basis on which the production of yarn and clearance of yarn could be arrived at. The whole demand in this account is purely based on presumption and that too on selective basis. Ld. Counsel also relied on various case laws in support of her contention that the demand of central excise cannot be made the basis on the simple physical shortage without any corroborative evidence for illicit clearance. 6. Ld. AR contested the submission of appellant. He submitt .....

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Commissioner (Appeals) cannot be faulted. 8. Heard both the sides and examined the appeal records. 9. The point for decision in these appeals is whether or not the appellant evaded central excise duty on yarn by way of unaccounted clearance. As mentioned earlier in the order, the demand covers two issues. The first one is the central excise duty confirmed on account of certain shortage of some varieties of yarn found on physical verification. The confirmation of demand is based on physical verif .....

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sted for re-verification. The main grievance is that various loose stock of yarn available were not accounted for while arriving at the total stock. Further, issue of yarn for doubling within the unit, clearance of one container for export was not considered while conducting the stock taking. On de novo proceedings, the Original Authority did allow the appellants claim regarding issue of yarn for doubling within the unit. While this was done, the appellants request for re-verification, on the .....

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Barud as well as the request of the Company for re-verification of the stock on the very next day. Even in the statement of the Managing Director, there is no indication or corroboration regarding any possible clandestine clearance of excisable goods. 10. The Hon ble Punjab & Haryana High Court in the case of Commissioner of Central Excise & Service Tax , Ludhiana Vs. Anand Founders & Engineers- 2016 (331) ELT 340 (P&H) held that clandestine removal cannot be established only on .....

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icer, the very next day along with the reasons for their request, it is apparent that such re-verification could have brought out the truth of the correct stock clearly. Appreciating the available evidence in the case, I find that the demand of central excise on account of clandestine removal solely based on the alleged shortage of excisable goods cannot be sustained. 11. Regarding the second issue of mis-match between the entries in the log book of the packing department and entries in the RG-I .....

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