2005 (8) TMI 513 - AT - Central Excise

Summary

Issues:
Shortage of finished goods and inputs leading to duty demand.

Analysis:
The case involved a dispute where officers found shortages of finished goods and inputs at the factory of the appellants compared to statutory records. A show cause notice was issued demanding duty on these shortages. The Adjudicating Authority dropped the duty demand on finished goods but confirmed it on inputs. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

The appellant's counsel argued that the shortage of inputs was due to using them in manufacturing finished goods and in-process goods not considered by the authorities. They also mentioned discrepancies in the statutory account entries. Citing precedents, the counsel emphasized the lack of evidence for clandestine removal of inputs by the department.

On the other hand, the SDR contended that as an SRP unit, maintaining accurate stock records was the appellants' responsibility. Referring to partner statements and panchnama, the SDR highlighted admissions of input shortages without supporting documentary evidence, relying on relevant legal decisions.

The Tribunal noted that the show cause notice linked input shortages to alleged clandestine removal of finished goods. While finished goods shortage charges were dropped, input shortage was upheld without considering in-process stock. The Commissioner (Appeals) overlooked incomplete account entries and in-process stock, failing to address the appellant's arguments. The department failed to provide concrete evidence of clandestine removal, with the Tribunal emphasizing the burden of proof on the department as per legal precedent.

Consequently, the Tribunal allowed the appeal, setting aside the previous order and providing consequential relief to the appellants. The decision highlighted the importance of proving clandestine removal beyond doubt, as mere assertions were insufficient.