TMI Blog2017 (3) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, (AR), for Appellant Shri Raj Kumar, (Chartered Accountant) for Respondent ORDERE Per: Anil Choudhary The Revenue is in appeal against the common Order-in-Appeal No.109-111-CE/2008 dated 24/10/2008, whereby the ld. Commissioner (Appeals) was pleased to allow the appeal setting aside the Order-in-Original. 2. The brief facts of the case are that M/s Shivani Metal Industries Pvt. Ltd., is manufacturer of Brass Ingots Zinc Ingots. The appellant also has a separate trading division for these products, which is separately registered with the Central Excise Department. The Office of Manufacturing Unit Trading Unit is situated in the Trading Division, which is in the factory premises of the Manufacturing Unit. On 22 nd February, 2007, the team of Preventive Officers of the Department inspected the Manufacturing Trading premises of the appellant. They thoroughly searched the premises and checked the records and stock of the factory, as well as of the Trading Division the Manufacturing Division, the discrepancies found where: - (i) Brass Scrap excess of 20.000 MT valued at about ₹ 41 lakhs. (ii) Brass Ingots excess of 23.164 MT valued at abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with further option to redeem on payment of redemption fine of ₹ 23,55,600/- with further direction to enter the same in the proper records and clear the same on payment of duty. Further, confiscation was ordered of 4.603 MT of Brass Ingot valued at ₹ 4,72,589/-, involving Central Excise duty of ₹ 77,126/- found in the Trading Unit premises with option to redeem on payment of redemption fine of ₹ 1,25,000/-. The proposed demand of ₹ 5,11,861/- on the Trading Unit, is in respect of goods found short in the Trading Division was dropped. Further, penalty of ₹ 15,37,737/- was imposed on the Manufacturing Division under Rule 25 read with Section 11 AC of the Central Excise Act, 1944. Further, penalty of ₹ 87,126/- was imposed on the Trading Division under Rule 25 read with Section 11 AC of the Central Excise Act, 1944. Another penalty of ₹ 2,00,000/- was imposed on Shri Aravind Agarwal - the General Power of Attorney Holder of the Manufacturing Unit the Trading Unit under Rule 26 of Central Excise Rules, 2002. 3. Being aggrieved the appellant preferred appeal before ld. Commissioner (Appeals) who have been pleased to allow the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by average weight number of Brass Ingots Zinc Ingots. For Brass Scrap - 400 Brass Paties of average weight of 50 kg. each were found. Regarding Appellant No. 2 (Trading Unit) Stock taking of appellant No. 2, as per Panchnama, the rame method had also been adopted for physical stock taking of appellant No. 2, as adopted for appellant No. 1. It is evident from the Panchnama that (i) no proper method of stock taking have been mentioned in Panchnama. (ii) number of Ingots have not been counted (i) and no inventory sheet has been made. Hence, it is not known and clear from the Panchnama as to what method was actually adopted to ascertain the excess of finished goods and raw material. I even find the unit of quantity is not mentioned in the Panchnama dated 22/02/2007, which is such a vital piece of record as it is the only basic document which gives the details of excess quantity found at the time of verification on the spot. Further, it is practically impossible that weight of each piece of Brass Ingot Zinc Ingot of different length and width is just equal to other goods. Naturally, it will vary from piece to piece with its size and width of each of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Further in their defence reply to the Adjudicating Authority the appellants have reiterated that alleged to be said excess goods have been duly recorded in the accounts maintained in the computer but the Officer did not allow to open the computers and prepared the details of stock taking as it is also evident from the Panchnama. Further the appellant have claimed that the stock position on the computer were retrieved/printed in the presence of appellant No.3 before Assistant Commissioner Central Excise, Lucknow. On the basis of computer printouts appellant No.1 2 have explained the physical stock position before Adjudicating Authority and a minor variation in following stocks were noticed which is as under:- Variation in the stock Appellant No.1 - Brass Scrap 0.84 MT Brass Ingot 2.288 MT Zinc Ingot 006 MT Appellant No.2 - The difference of 4.603 MT excess in the Brass Ingots are nothing but it was a stock of non cenvatable goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izure and subsequent confiscation was not justified as held by the Hon ble Tribunal in the case of Jai Shri Plastics Versus Commissioner of Central Excise, Raipur [2003 (161) ELT 920 (Tri. - Calcutta)]. Hence, it may be concluded that physical stock taking was not done with precision, Authorized Signatory of Appellant No. 1 2 was not given the opportunity to explain the stock position on the spot as per inventories maintained in computer by the Appellant No. l 2, later on during investigation, the stock position of Appellant No. l 2 were explained by the Appellant No. 3 and alleged excess goods found within the factory. Thus in the light of Hon ble CESTAT judgments discussed supra the goods are not liable for confiscation. (iii) As regards penalty, I observe that since the charge of confiscation has been failed. There is no question of any penalty on appellant No.1 2 under Rule 25 of the Central Excise Rules, 2002. Revenue has charged that Appellant No.3 was controlling all the activities of Appellant No. l 2. Therefore he is liable to penalty. As the charges against Appellant No. l 2 is not sustainable, thus the penalty on Appellant No. 3 under Rule 26 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at the factory premises. Only a small sample was weighed and on the basis of the weight of the sample, the eye estimation of the total stock was made. Thus, there are bound to be errors and it has been rightly appreciated so by the ld. Commissioner (Appeals). In this view of the matter, instead of that there is no merit in the appeal of Revenue and the same is fit to be dismissed. 6. Having considered rival contentions and on perusal of record, I find that the stock valuation has been done by weighment of only a sample and thereafter eye estimation is made for the whole lot of the stock. In this view of the manner of stock taking, there is bound to be variation and no adverse inference could be drawn on the basis of such variation. This is also evident from the statement of Mr. Sarvesh Chaturvedi - the Authorized Signatory recorded on the date of visit, wherein on being questioned about the excess stock found, he stated that - we first re-enter all the entries in our computer and then in the RG-1 register. The stock of inputs and/or finished goods, as found excess, is duly entered in the computer. The production of Brass Ingots for the date 22/02/2007, is duly entered in comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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