TMI Blog2021 (7) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... unal have repeatedly held that insignificant shortage in the stock of raw materials and finished goods does not lead inevitable evidence of clandestine removal, in absence of corroborative material on record. Appeal allowed - decided in favor of appellant. - Excise Appeal No. 50154 of 2019 (SM) - FINAL ORDER NO.51641/2021 - Dated:- 7-7-2021 - SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Ms.Surabhi Sinha, Advocate for the appellant Ms. Tamnna Alam, Authorised Representative for the respondent. ORDER The appellant, Jai Balaji Industries Ltd. is engaged in the manufacture of Sponge Iron and M.S. Billets, in two Divisions, under common registration. Both the products Sponge Iron and M.S. Billets are dutiable. For sponge iron, they have three rotary kiln of 100 TPD each, whereas for manufacturing of M.S. Billets, they have four Induction furnace of 8 Ton capacity each. Raw materials for Sponge Iron are Iron Ore Lumps, Iron Ore Pellets, Coal and dolomite. Raw materials for M.S. billets are Pig iron, M.S. scrap, and sponge iron (including In-house production). The appellant maintains regular books of accounts and the statutory records. 2. There was an inspection in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he panchnama proceedings, who inter alia, stated that due to accident in the factory on 27.05.2016, the production process was stopped and remained stopped since then. Mr. Ghore also mentioned in his statement that he was satisfied with the panchnama proceedings. The appellant also debited the duty as calculated by the officers vide Entry No.759 dated 9.6.2016 in their RG-23A Part-II register. 5. In view of the aforementioned facts, it appeared to Revenue that the appellant was indulging in unaccounted production of finished goods and subsequent clandestine removal without cover of central excise invoice and without payment of duty. Thus, they have contravened the provisions of the Act read with Central Excise Rules. Accordingly, show cause notice dated 4.5.2017 was issued requiring the appellant to show cause, invoking the extended period of limitation, as to why the duty amount of ₹ 16,80,628/- on such shortage may not be demanded and recovered with proposal to appropriate from the pre-deposit made during investigation, with proposal to impose penalty. 6. The appellant contested the show cause notice stating that during the relevant period when the inspection were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lp of the said surveyor only estimated the height of the heap of the product - raw materials and finished goods and calculated the quantity on the basis of statistical method of measurement, wherein, there is bound to be difference and/or error. 7. The Asstt. Commissioner passed order-in-original dated 16.01.2018 dropping the proceedings and observing that the manner of physical verification is not error-free, and there is bound to be variations further observing that the actual weighment has not been done. Further, observed that there is no corroborative evidence to allege that the apparent shortage is due to clandestine removal. Further, observing that the allegation of clandestine removal is required to be based upon sufficient tangible and affirmative evidence. Since no such corroborative evidence of clandestine removal is available on record, nor alleged, it was held that the apparent shortage cannot be termed as goods clandestinely removed. It was also observed that the apparent difference/shortage in weight works out to 0.018% in respect of billets as compared with the annual production and 3.34% in respect of the pig iron, as the appellant have received 22,525.60 MT of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for verification by the Department. Accordingly, ld. Commissioner (Appeals) was pleased to set aside the order-in-original and confirmed the demand along with the interest and further equal amount of penalty was imposed under Section 11 AC (1) (C) of the Act. 10. Being aggrieved, the appellant-assessee is before this Tribunal. 11. Ld. Counsel, Ms. Surabhi Sinha urges that the ld. Commissioner has without finding the observations and findings to be incorrect in the order-in-original, has erroneously set aside the adjudication order and confirmed the demand, in absence of any adverse materials on record. This Tribunal has repeatedly held that no adverse inference can be drawn for apparent shortage in absence of any material evidence on record, indicating clandestine removal, for apparent shortage in such type of industry, wherein the raw material is Iron Ore, Pig Iron, etc. The quality and the moisture content varies from consignment to consignment. Similarly in case of coal also, there is variation in the quality being ash content, volatile material, carbon content, etc.. Thus, yield varies on these several factors and also, on the weather conditions, and also on the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtage beyond tolerance limit. This being not done, the adverse inference by adopting the volumetric method of stock valuation cannot lead to adverse inference. Moreover in view of the percentage of less than 1% in case of M.S. Billets and about 3% in case of Pig Iron. The appellant have further placed reliance on some rulings, which are as follows:- I. Associated Cylinder Industries 1990 (48) ELT 640 (T) The Tribunal has held that comparison between physical stock and RG-I Register only shows whether statutory record was properly maintained or not. However, that itself is not sufficient to prove conclusively that there was any clandestine removal. For establishing charge of clandestine removal, either direct physical evidence by way of seizure of goods or documents or there must be sufficient circumstantial evidence to show preponderance of probability. II. Sayaji Iron Engg. Co. (P) Ltd. 1990 (45)ELT 104 (T) , it was held that irregularities in maintenance of RG-1 Register cannot be conclusive evidence for clandestine removal of goods. III. J.C. Rolling Mills 2012 (276) ELT 254(T), it has been held that every shortage cannot be presumed to be case of cland ..... X X X X Extracts X X X X X X X X Extracts X X X X
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