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Commissiner of Central Excise, Haldia Versus M/s. Shri Badrinarayan Alloys & Steels Ltd.

2017 (7) TMI 982 - CESTAT KOLKATA

Clandestine manufacture and removal - shortage of cenvat inputs - M.S. Ingots - Held that: - the revenue had neither disclosed any material nor described the method of stock taking to counter the case. The only contention is that the small quantity was lying in the factory premises and therefore, the weighment was done easily. I am unable to accept the contention of the revenue without any basis, such as, the details of the weighment etc - The Tribunal consistently observed in various decisions .....

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hich is obviously supported by some material such as, weighment slip, counting slip etc, as the case may be. It cannot be on the basis of eye estimation or otherwise - The assessee claimed that the said materials were lying at their factory and informed the department subsequently and no enquiry was conducted thereon. That the allegations in the instant case are clandestine removal of the goods and revenue had not disputed the major portion of the demand dropped by the Adjudicating Authority. .....

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-. By letter dated 29.03.2017, the A. C. (T & R) Central Excise & S. Tax, Haldia Commissnerate informed the Tribunal that the duty involved in the present appeal would be ₹ 45,29,162/- instead of ₹ 1,17,40,607/- as mentioned in Sl. No. 7 of EA-5. 2. The facts of the case in brief are that the respondents are having two manufacturing units namely (i) steel melting shop, engaged in the manufacture of M.S. Ingots and (ii) Rolling Mill division, engaged in the manufacture of Bars .....

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impugned order, the Adjudicating Authority confirmed the demand of duty of ₹ 80,323/- alongwith interest and imposed penalty of equal amount of duty on 55.780 MT of unaccounted M.S. Ingot removed from the respondent's steel melting shop division. Revenue filed this appeal against the impugned order to the extent of the demand of duty of ₹ 45,29,162/- in respect of the goods found short in stock taking. 3. Heard both sides and perused the appeal records. 4. The Ld. A.R. appearing .....

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the stock as per DSA (in M.T) was M.S. TOR 2079.780, M.S. Ingot/Billet 251.490, M.S. Ingot 137.160 and Runner/Riser 13.610. It is submitted that there was no weighment of the goods. It is also contended that subsequently, the appellant informed the department that the stock taking was not done in proper manner. It is categorically requested to provide the details of the stock taking report in so far as weighment slip or counter slips etc. which were used at the time of verification of the stock .....

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that there is nothing in the SCN or the stock verification reports themselves to show the procedure adopted by the department to arrive at such huge shortages. The noticee, I find, has been consistently disputing the physical verification exercise undertaken by the department and had sought from the department copies of weighment / verification slips prepared by the officers while verifying the stock of the goods in their factory and the mode of such verification. The copies of such slips, if a .....

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arges of demand of duty arising out of shortages of stock the goods ought to be physically weighed. The SCN or the stock verification reports in the instant case are too bereft and devoid of details that go to show that no such physical verification exercise which can be accepted as proper in the eyes of the law, had actually been carried out by the investigation officers at the premises of the noticee's factory premises. In the absence of convincing evidence of physical weighments, it is di .....

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as to clear the haze of uncertainty of the process of physical weighment undertaken by the department. 7. On perusal of the grounds of appeal, I find that the revenue had neither disclosed any material nor described the method of stock taking to counter the case. The only contention is that the small quantity was lying in the factory premises and therefore, the weighment was done easily. I am unable to accept the contention of the revenue without any basis, such as, the details of the weighment .....

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there has been no allegation of any irregularity on that account. The stock taking was conducted based on average weight of a few bundles of wire rods and H.B. wires. It is also an admitted fact that one bundle of H.B. Wires varies in weight from another bundle by a few kilograms. As such, taking an average of 5 bundles and projecting the average weight for arriving at the total weight of the stock can, at best, give a rough estimation of the stock. That being so, the allegation of clandestine .....

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ecifically mentioned in question No. 9, which it appears has not been admitted specifically by the Director. In Anand Founders & Engineers - 2016 (331) E.L.T. 340 (P&H), the Hon ble Punjab & Haryana High Court held that mere shortage of finished goods in stock taking is not enough to hold the charge of clandestine removal. In Chandrapur Enterprises Ltd. - 2014 (310) E.L.T. 904 (Tribunal-Delhi), the Tribunal held that when the quantity of finished goods was determined on estimation ba .....

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eld as under :- 5. I find that the case mainly rests on alleged shortage of finished products during physical verification. The total quantity should have been 290.597 as per the records maintained by the appellant. On physical verification, the stock was found to be 245.597 MT resulting in a shortage of 45 MT. It is a fact that the Panchnama is very brief and did not contain details of how the weighment was carried out especially considering the weighment on physical verification was arrived at .....

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by stage with precision, it is necessary to have a clear preponderance of probability which will shift the burden to the assessee to defend his case against non-payment of duty. Here, the very basis of shortage is doubted and as such, any admission of such shortage is of no relevance in the absence of any corroboration. Further, I find that the ld. Commissioner (Appeals) held that the admitted fact need not be proved again. It is not clear as to what type of fact has been admitted. Even if Shri .....

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an Industries Ltd. - 2013 (292) E.L.T. 123 (Tri.-Del.) held that the allegation of clandestine removal in such type of cases are to be established by production of concrete and tangible evidence. In the said case also, the appellant admitted the stock taking and agreed to pay the excise duty. Later, it was found that the stock taking was not done on actual basis. In the case of Commissioner of Central Excise Vs. Omkar Textile Mills Pvt. Ltd. reported in 2010 (259) E.L.T. 687 (Guj.), the Hon ble .....

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ysically verify the stocks. Shri Rajnikant Agarwal, Director of the assessee-Company submitted an affidavit wherein it was clearly mentioned that the stock verification was not conducted physically and was not compared with the recorded balance thereof. It was contended that the statements and panchnama were both recorded forcibly and the factual position of stock was not ascertained. He had, therefore, by affidavit dated 20-7-2003 retracted the facts mentioned in the panchnama and the statement .....

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s no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal .....

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the parts in question were used in the Chilling Plant. The Court held that once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved. The said decision would not have any applicability to the facts of the present case as the assessee has disputed that there .....

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hable under the provisions of the IPC, it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of .....

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record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accused voluntarily. If the Court believes that the confess .....

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