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2019 (8) TMI 315

..... under the provisions of section 14 of Central Excise Act - weighment slips, recovered during the course of search - Valuation of the alleged shortage of stock - imposition of Personal penalty. Alleged shortage of finished goods of 128.435 MT - HELD THAT:- There may be a possibility of variation of 10% to 15%, but the shortage cannot be stated to be illusory, as worked out during physical stock taking. The panchnama / mahazar was drawn in front of two independent witnesses who witnessed the physical stock taking. In case of disagreement of the method of stock taking the appellant should have raised objection during the time of stock taking or soon thereafter or within a period of few days (one week), which is not the case - the alleged shortage of finished goods if held to be correct, but there needs to be some allowances say 15%, is given for error or variation, as the stock taking was done in a hurried manner. Parallel invoices - HELD THAT:- In the course of verification of the alleged buyers / receiver of the goods before the Commissioner (Appeals), Shri A. K. Malhotra, Director of M/s Rathi Steel Dakshin Limited stated that his statement was taken under pressure. Further, he had .....

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..... garwal is Director of the company and Mr. Nitish Ranjan is the Authorised Signatory. Appellant also have aweigh bridge in their factory premises, which is also used by outsiders/ other industries. 3. On the basis of an information that the Appellant was engaged in evasion of duty by clandestinely removing some of the MS ingots produced by it on the basis of parallel invoices, the officers of the Anti Evasion Branch on 31.07.2012 visited the factory of the Appellant and conducted physical verification of stock in the factory premises of the Appellant, with the help of factory staff and also in presence of Sh. Nitish Ranjan, Authorised Representative of the Appellant and two other independent witnesses. A physical stock verification report was prepared on the spot and signatures of Sh. Anshul Aggarwal, erstwhile Director of the unit, Sh. Nitish Ranjan, then Authorised signatory of the Appellant and the two independent witnesses, were taken on the said report. The weighment slips, records & invoices of the relevant period and photocopy of the relevant page of RG-1 register were resumed under resumption memo. 4. The officers conducted the physical verification of the stock of the a .....

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..... 15,022/- 16,300/- 9,150/- 8,39,472/- 3 Shortage of stock 128.435 41,74,138/- 5,00,897/- 10,018/- 5,009/- 5,15,924/- Total 422.165 1,35,26,042/- 15,71,924/- 31,439/- 15,719/- 16,19,082/- 8. Therefore the department issued Show Cause Notice for the following demands:- Shortage of finished goods (in stock) weighing 128.435M.T., alleged to have been cleared clandestinely without issue of invoice and without payment of central excise duty amounting to ₹ 5,15,924/-. Clandestine clearances of 208.98 MT Ingots made without issuance and without payment of central excise duty amounting to ₹ 8,39,473/- alleged on the basis of weighment slips recovered from Shri Devki Nandan; and Clandestine clearance of 84.75 MT of MS Ingots made under the cover of parallel invoices and without entering in their books of account and without payment of central excise duty amounting to ₹ 2,36,686/-. 9. To substantiate itsallegation, the department relied on statement of Sh. Devki Nandan, weigh bridge incharge of the Appellant, recorded under the provisions of section 14 of Central Excise Act, on 31.07.2011, and at the time when the eight weighment slips were recovered from his possession. It w .....

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..... anufacture of TMT Bar for which they procure MS Ingots from various manufactures. After having seen copy of invoice no. 19 dated 29.07.2011 & 20 dated 29.7.2011 issued by M/S RIPL wherein 28.240 MT MS Ingots valued ₹ 8,52,848/- and 28.320 MT MS Ingots valued ₹ 8,55,264/- had been shown respectively dispatched to them, he admitted that they had received the goods mentioned in these invoices, but did not enter the same in their statutory records. He admitted that these consignments were not entered in their statutory records as the same was received without cover of invoice. After having seen the weighment slip No. 8 dated 29.07.2012 he admitted that they have received 274 pcs. Of MS Ingots weighing 31035 Kgs. From M/s RIPL which was not entered in their statutory records as the same was received without cover of central excise invoice. He admitted the receipt of MS Ingots under the parallel invoices and that evidenced under weighment slip, have not been entered in their records. These MS Ingots were used in manufacture of TMT Bars which they cleared clandestinely without entering in the statutory records. He stated that he was willing to deposit Central Excise duty o .....

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..... MS Ingots without payment of duty to them, he admitted that through above mentioned weighment slips, they had received 110.545 MT MS Ingots from M/s RIPL Bhiwadi which was not entered in their statutory records. He admitted their mistake and stated that he was ready to deposit central excise duty along with interest in respect of goods manufactured out of the aforesaid MS ingots and clandestinely clearance thereof by them. Sh. Joshi in his further statement dated 3.12.2012 again confirmed his above statements. 15. The adjudicating authority confirmed the show cause notice on contest alongwith equal penalty on the appellant company and further appropriated the duty from the amount already deposited during investigation. Further, penalty of ₹ 10 lakhs was imposed on the Director - Shri Anshul Agarwal and ₹ 5 lakhs on the Authorised Signatory Shri Nitish Ranjan, under Rule 26 of Central Excise Rule, 2002. Being aggrieved, the appellants preferred appeal before the Commissioner (Appeals) who vide the impugned order have been pleased to reject the appeals on the principal of preponderance of probability, as laid down by the Hon ble Supreme Court in the case of Collector of C .....

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..... gation, the benefit of closure of the matter under Section 11AC (1)(d) should be extended to them. Further, the personal penalties imposed on the Director and the other Authorised Signatory are also fit to be set aside. 20. Opposing the appeals the learned Authorised Representative for Revenue states that stock taking was done in presence of two independent witnesses with the assistance of the staff of the appellant and thus the same cannot be questioned at a later point of time. He further relies on the findings of the court below, and prays for dismissing the appeals. 21. Having considered the rival contentions and on perusal of the record, I find that so far the alleged shortage of finished goods of 128.435 MT is concerned, there may be a possibility of variation of 10% to 15%, but the shortage cannot be stated to be illusory, as worked out during physical stock taking. The panchnama / mahazar was drawn in front of two independent witnesses who witnessed the physical stock taking. In case of disagreement of the method of stock taking the appellant should have raised objection during the time of stock taking or soon thereafter or within a period of few days (one week), which is n .....

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