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TMI Blog2021 (7) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... d, Mr. Rajiv Ghore, Dy. Manager (Accounts), who was present, declared the stock of finished goods and raw materials as held by them on 9.6.2016. The officers with the help of one surveyor, viz. Dinesh Patel employed with South Eastern Cold Fields Ltd., conducted physical verification of the stock, which was worked out as follows:- Name of Item Declared Stock (MT) Stock found during physical verification Shortage M.S. Billets 22.28 9.91 12.370 Pig Iron 1160.77 385.458 775.312 Coal Fines 8157.65 7851.207 306.443 Iron Ore 23251.16 22700.715 550.445 Iron Ore Pellets 579.46 553.484 25.976 3. The difference in the declared stock and physical stock (in verification) was found to be within tolerance limit as regards coal fines, iron ore & iron ore pellets. However, as regards shortage in M.S. Billets and pig iron, the officers considered the same to be substantial and beyond the tolerance limit and accordingly worked out the differential duty on such shortage calculated as follows:- Name of item Declared stock (MT) Stock found during physical verification. Shortage/Excess Quantity. Rate per M.T. No. & Date of invoice from which rate ascertained Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clandestine removal. The apparent shortage is attributable to lack of accounting adjustment of normal loss in the manufacture. The yield of the finished goods depends upon the several factors like condition of plant and machinery, quality of raw materials, weather conditions, etc. etc. It was further urged that there has been no instance wherein any alleged clandestine clearance has been intercepted by Revenue or any other agency. The appellant maintains proper books of accounts and statutory records and are using software package - Oracle Accounting Package. The appellant also prepares Raw Materials Consumption and Production Report in the regular course of business. Further, sponge iron is both a final product as well as an intermediate product. The appellant is entitled to claim exemption on the intermediate product under Notification No.67/95-CE. The appellant also submitted their daily stock account of raw materials and finished goods for the month of March, April and May, 2016. Further, the appellant has been regularly filing their monthly returns in Form ER-I and also the details of receipt and consumption of inputs and the production of finished goods in Form ER-6 and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tric method by multiplying the volume with the density of the heap i.e. conversion factor. It was further contended that the appellant has suo moto debited the duty, on such shortage. Further, the Asstt. Commissioner has erred in observing that there is no corroborative evidence on record of clandestine removal "Save and Except" the apparent shortage. Further, reliance was placed by the Revenue on the ruling in Shiva Smelters Pvt. Ltd. - 2016 (338) ELT A-228 (AP), wherein with reference to Rule 9(5) of CCR, it was observed by the High Court of Andhra Pradesh, that the manufacturer of final product is required to maintain proper record for receipt, disposal and consumption of inventory of input, in which relevant information regarding the duty paid character, further burden of proof as regards admissibility of cenvat credit lies upon the manufacturer for taking such credit. It was not the obligation of the Revenue to prove clandestine removal of the raw materials. 9. Ld. Commissioner (Appeals) differed with the findings of the Adjudicating Authority and further observed that in view of there being no protest subsequent to the date of Panchnama, as regards the difference or shortage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 3% in case of pig iron, which are also in the tolerance limit, but they have not been erroneously considered while issuing the show cause notice. The findings recording by the Adjudicating Authority regarding insignificant variation as regards the shortage being within the tolerance limit, has not been found to be wrong or erroneous by the Commissioner (Appeals). Further, the Commissioner (Appeals) has observed the facts on record, that the appellant has filed their periodical returns being Form ER-1, ER-4, ER-5, ER-6, etc. There is no allegation that the appellant has not maintained proper books of accounts and other statutory records. Admittedly, as the Computer Data Entry Operator was on leave, the data assessment could not be assessed at the time of panchnama proceedings. Further, the Commissioner has ignored the facts that the appellant has given cogent explanation for the apparent variation in stock, which has not been found to be untrue, and as such, adverse inference by the ld. Commissioner (Appeals) is erroneous and without any basis. It is also urged that the estimation of stock on the basis of measurement of the height of the heap, does not give the exact quantity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s below was affirmed [2013 (287) ELT 243 (Gujarat)]. 12. It is further urged that ruling of the Allahabad High Court in Minakshi Castings (supra) has been consistently followed by this Tribunal in several similar cases, particularly, in the case of Behariji Marketing Pvt.Ltd. - 2015 (317) ELT 298 (T) and Hon'ble Delhi High Court in the case of Shakti Zarda Factory - 2015 (321) ELT 438 (Delhi HC - DB), wherein, it is held that initial burden was on the Revenue to prove the allegation of clandestine receipt of raw materials and finished goods. 13. Ld. Authorised Representative for the Respondent/Department relies on the impugned order. 14. Having considered the rival contentions, I find that the method of stock verification adopted by the Revenue in this case (during inspection) is not correct and free from error. Further, such stock taking is not provided under the scheme of the Central Excise Act read with the Rules. Further, I find that the appellant has given cogent explanation for the apparent shortage, which has not been found wrong by the court below. Further, I find that such apparent shortage is less than 1% in case of M.S. Billets and about 3% in case of Pig Iron, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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