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TMI Blog2024 (10) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 26. 2. The assessee is assailing in its appeal the confirmation of duty along with interest and imposition of penalty under section11AC. Tekriwal is contesting the imposition of personal penalty under Rule 26. 3. We have heard learned counsel for the appellant and the learned authorised representative for the Revenue and perused the records. 4. The assessee manufactures Steel shots/grits and CI Shots/Grits and is registered with the central excise. It also avails CENVAT credit on its inputs and input services. 5. The officers of the Directorate General of Central Excise Intelligence [DGCEI] received intelligence that the assessee was evading duty by under-reporting production and removing the quantity so under reported without paying duty. Acting on this intelligence, the officers of DGCEI visited the premises of the assessee, examined their records and took stock of the goods physically available. While the work-in-progress records showed 951.646 MT as the WIP, the actual quantity of goods in the semi-finished state was only 70 MT. Thus, there was a shortage of 882 MT of semi-finished goods (or WIP). 6. The assessee maintained inventory of (a) raw material; (b) fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this register revealed that there is a direct correlation between the raw material, work in progress and the finished goods. The quantity shown as consumed in the WIP register is the quantity of the final product that will be produced and all production losses have been taken into account. c. No prudent business will produce dust which is saleable in the market even for a low price and not account for it and dump it on public roads. d. Shri Pankaj Tekriwal was the Director of the company during the relevant period and was responsible for maintaining all the records. Therefore, the penalty imposed on him under Rule 26 must also be sustained. Findings 11. We have considered the submissions advanced by the learned counsel for the appellant and the learned authorised representative for the Revenue and perused the records. 12. Officers of the DGCEI visited the appellant's factory and took stock of the goods and compared them with the records maintained by the appellant. There were records of raw material, work-in-progress and of finished goods. There was no shortage in the raw material and in the finished goods. The dispute is only regarding the shortage of stock found in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded as 'burning loss'. To examine this, we need to understand what is the percentage of various losses during the manufacture. According to the statement of the Production Manager of the appellant Shri Manoj Kumar Jain, there will be 7% hot metal loss, 5% Dust loss (which is recoverable), Blow holes (porus shots) loss of 1% and skull formation loss of 1%. These figures are not in dispute and these have been reiterated by the learned counsel for the appellant in the synopsis submitted before us. Thus, the total loss is 7% +5% +1% +1%= 14%. It includes all four forms of losses including the dust loss (which is recoverable). 17. The loss recorded as 'burning loss' in the WIP during August 2011 was 105.450 MT out of raw material of 736.450 MT which is 14.31%. Thus, it is evident that all forms of losses including the dust loss which is recoverable have been accounted for in the WIP by subtracting them from the raw materials itself. The percentage of losses recorded in different months between April 2007 to May 2012 varied and the average loss was 15.11% as recorded in table titled Annexure-A in the impugned order. 18. After accounting for these losses, the recorded stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the juice and the sugar content. The appellant was manufacturing about 12 lakh maunds of sugar and paid duty thereon. Based on the calculations by the Assistant Chemical Examiner, production of 11,606 maunds of sugar was alleged to have been short reported. It is in this context, the Supreme Court set aside the order of the Government of India and allowed the appeal. 23. In Commissioner of Customs, C. Excise and ST vs. Auto Gollon Industries P. Ltd. [2018(360)ELT 29 (All.)], there was no record of purchase of various raw material and there was only a record of purchase of Armature Assemblies and the Allahabad High Court held that it was not possible for the assessee to manufacture motors with only armature assemblies and therefore, upheld the order of the Tribunal in favour of the assessee. 24. In Continental Cement Company vs. Union of India [2014 (309) ELT (411 (All.)], Allahabad High Court found that there no investigation to establish that the raw material was procured, transported and the goods were manufactured and sold. The case was built only on the documents allegedly establishing the clandestine production and sale. The genuineness of these documents was not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll formation loss of 1%. These add up to 14%. The entire 14% and in some cases more has already been deducted in the WIP register as discussed above. Therefore, there is no doubt about the genuineness of the register and the entries made therein and there is no other explanation for the shortage. 29. Learned counsel also submitted that there are no invoices or documents showing sale of the allegedly clandestinely removed goods and no evidence of cash flow. We find that if invoices are issued and the sale proceeds are also accounted for, then the entire sale would be genuine sale. Clandestine removal, necessarily implies that some actions have been taken clandestinely. Clandestine activities have to be proved with whatever evidence is available and if all records are available and everything is accounted for, it cannot be clandestine removal. What needs to be seen is whether given the evidence on record, it can be reasonably presumed that there was clandestine removal of the goods. In the case of Collector of Customs, Madras and others vs D. Bhoormull [1983(13)ELT. 1546(SC)], the Supreme Court laid down the principle to be followed with respect to proof in such cases. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence' (12th Edn. Article 320, page 291), the "presumption of innocence is, no doubt, presumptio juris : but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property," though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice. *** 34. The propriety and legality of the Collector's im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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