2006 (3) TMI 364 - AT - Central Excise

Confiscation of seized goods along with truck - Clandestine removal - Demand and penalty - shortage of the finished goods - HELD THAT - From the perusal of the said RG 23A Part II Folio No. 27 and invoice No. 235, dated 23-5-96 it can be concluded that the appellants had prepared the duty paying document and had debited the duty liability in RG 23A Part II. The appellants contention also is fortified from the fact that the RG 1 of the appellant was also up date with the clearance entries of 23-5-96. From the above facts and circumstances, it is very clear that the seized goods found in the truck were duty discharged goods and not liable for confiscation. The lower authorities have brushed aside these protest on the ground that the appellants representatives have agreed to the correctness of the stock verification. To my mind, I find that the appellants contention that there can be error in eye estimation of the physical stock seems to be correct. I find that the authorities have calculated a shortage of 19.620 M.T. out of the recorded stock of 1042.715 M.T. against physical stock of 1023.093 M.T. The shortage in terms of percentage works out about 1.91% of the total stock. This may be also due to the fact that there was no physical weighment of the finished goods. Errors may creep in the eye estimation of huge quantity of the stocks. To come to conclusion that there was clandestine removal of goods due to shortage of finished goods, that also on eye estimation, without any further corroborative evidence, would be wrong. In this case the authorities have not produced any corroborative evidence as regards clandestine removal of finished goods. The authorities sought to tie up the seized goods in the truck as corroborative evidence, but since that allegation has failed, as held by me in earlier paragraph, it cannot be said that the appellant has clandestinely removed the finished goods found short. Thus, the impugned order-in-appeal, to the extent it affects the current appellant, is set aside. Appeal allowed with consequential relief, if any to the appellants.

Summary

Issues:
Seizure of goods without duty paying documents, shortage of finished goods, eye estimation in stock verification.

Analysis:
1. Seizure of Goods without Duty Paying Documents:
The appellant's representative argued that duty paying documents were prepared but not collected by the driver of the intercepted truck, leading to the seizure of goods. The Tribunal examined the invoice and RG 23A Part II, which showed the preparation and debiting of duty against the invoice. The Tribunal concluded that the seized goods were duty discharged and not liable for confiscation, as supported by the up-to-date RG 1 of the appellant.

2. Shortage of Finished Goods:
Regarding the shortage of finished goods found in the appellant's factory, the appellant contended that the discrepancy was due to incorrect eye estimation during stock verification. The Tribunal noted that the physical stock verification lacked weighment records and was based on eye estimation. Considering the significant quantity of M.S. bars and miss rolls involved, the Tribunal agreed that errors could occur in eye estimation. The authorities' conclusion of clandestine removal based on eye estimation without corroborative evidence was deemed incorrect. The Tribunal set aside the order-in-appeal, ruling in favor of the appellant.

3. Eye Estimation in Stock Verification:
The Tribunal emphasized the potential for errors in eye estimation of large quantities of stocks, especially without physical weighment records. It highlighted the lack of corroborative evidence to support allegations of clandestine removal based solely on eye estimation. The Tribunal's decision to overturn the order-in-appeal was based on the acknowledgment of the possibility of errors in eye estimation and the absence of conclusive evidence to prove clandestine removal.

In conclusion, the Tribunal found in favor of the appellant, setting aside the order-in-appeal due to the lack of concrete evidence supporting the allegations of clandestine removal and acknowledging the potential for errors in eye estimation during stock verification.