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2019 (8) TMI 671

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..... nd that there is no denial of the fact that the stocks were ascertained by the appellant on the basis of sectional measurement basis and not on actual weighment basis, but, however, the clearances were effected upon actual weighment basis. In such cases there is bound to be difference in weighments. A case of shortage or excess of stock and/or clandestine removal thereof without payment of duty is not established in such a situation. In the case of ROURKELA STEEL PLANT [SAIL] VERSUS COMMISSIONER OF C. EX., BHUBANESWAR [ 2000 (7) TMI 726 - CEGAT, KOLKATA ] this Bench of the Tribunal, in the case of another sister unit of the appellant, has also held that based upon the difference shown in the figures in the annual financial accounts entered according to sectional weight and RGI register showing dispatch figurers on Railway Receipt weighment basis, a case of clandestine manufacture and removal cannot be sustained. Appeal allowed - decided in favor of appellant. - Ex. Appeal No. 140 of 2007 - FO/A/75999/2019 - Dated:- 13-8-2019 - SHRI P.K. CHOUDHARY, MEMBER (JUDICIAL) And SHRI P.V. SUBBA RAO, MEMBER (TECHNICAL) Dr. Samir Chalraborty, Sr. Advocate & Shri Abhijit Biswas, Advocate fo .....

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..... s not carried out by or in presence of the Proper Officer, the requirement of Rule 223A of the said Rules was not satisfied and, hence, the impugned order passed is ultra vires Rule 223A of the said Rules and, therefore, the impugned order is without jurisdiction and bad in law. In support of this contention the appellant has relied upon the decision of this Bench of the Tribunal in Rourkela Steel Plant Vs. Collector of Central Excise, 2001(138) ELT 732 (T-Kol) and of the coordinate Bench of the Tribunal at Bangalore in Steel Authority of India Limited Vs. CCE, Mysore, being Final Order No. 1945/2005 dated October 04, 2005 passed in E/55/2003. (ii) In any event, the shortage/excess in the Annual Shortage and Surplus Report having been determined on notional basis, i.e. production figures are calculated on estimated basis on sectional measurement (sectional weight x length x production of pieces) and consumption in the subsequent processes also being based on similar sectional measurement whereas the discharge figures of goods from the factory being on actual weighment basis, there is bound to be difference arising because of the different yardstick being adopted and hence, no alleg .....

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..... tral excise demand, which is sustainable. It was also contended that since the appellant itself had submitted the annual stock taking figures there was no infirmity in the Revenue considering the same and initiating proceeding under Rule 223A of the said Rules since the appellant had not paid the central excise duty on the goods found short as per such Annual Shortage and Surplus Report of the appellant itself. 7.1. Proceedings under Rule 223A for shortage of goods is to be based on stock taking in the factory in the presence of the proper officer . The said rule makes it explicit that the involvement of the proper officer for applicability of the said provision and for initiation of any proceeding for recovery of any duty short paid found on the basis of the said stock taking carried out in the presence of the proper officer is an absolute requirement. The materials on record herein undisputedly evidence that there was no involvement of the proper officer in the subject annual stock taking carried out on its own by the appellant. The proper officer , as required under Rule 223A of the said Rules, having not ascertained the stock nor being involved with the said annual stock taking .....

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..... volumetric estimate and conversion to theoretic weight based on sectional weight. 7.4. The relevant portion of the of the order of the Tribunal in Appeal No. E/55/2003 is reproduced below:- ….5. We have gone through the records of the case carefully. The demand has been issued under Rule 223A covering a period of 13 years from 31.3.1998 to 31.3.2001. The Revenue has issued the show cause notice on the belief that Section 11A is not applicable for demands made under Rule 223A. The Department s view is not correct in terms of the judicial pronouncements cited by the appellants. There is no allegation that the appellants have removed goods in clandestine manner. Moreover, the stock taking was done by the appellants themselves. The departmental officers only associated with the same. Hence, the stock taking cannot be said to have been conducted in terms 223A of the Central Excise Rules. In any case the shortage arrived at is based on estimates. The estimate cannot be said to be very accurate as it has got its own limitations. It should also be appreciated that there are practical problems in steel plants. In the manner of accounting of their production. The CBEC Circular No. 52 .....

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..... ferent basis were adopted for estimating production, consumption and stock taking and clearances discrepancy between stock taking figures and production figures does not lead to the conclusion that the difference has been removed clandestinely. 8. We have also perused the reconciliation statements submitted by the Ld. Sr. Advocate for the period in dispute which has not been objected by the Ld. D. R. On the basis of the same we are satisfied with the reasoning given by the Ld. Sr. Advocate with regard to the shortage in stock, which clearly shows that the same is well within the permissible limit prescribed by the CBEC. Moreover, it is not the case of the Department where any clandestine removal has been alleged to hold that the alleged shortage in stock is removed without payment of duty. 9. We, therefore, find that the above issues are fully covered by the above decisions of the Tribunal which have attained finality, the Revenue having accepted them. Respectfully following the principles laid down in the said decisions which, as discussed above, are applicable to the instant case also, we are of the view that the impugned order cannot be sustained and it is accordingly set aside. .....

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