2005 (7) TMI 591 - AT - Central Excise

Summary

Issues:
1. Shortages and excess stock detected during stock verification.
2. Show cause notice issued leading to imposition of duty, confiscation, and penalties.
3. Appellant's contention regarding shortages and excess stock based on accounting practices.
4. Board's Circular regarding permissible limits of shortages.
5. Lack of evidence reflecting clandestine removal of goods.
6. Decision on setting aside the impugned order and allowing the appeal.

Analysis:
1. The Central Excise Officers conducted a stock verification at the appellant's factory, revealing shortages of 11.052 MTs of steel products and an excess stock of 11.941 MTs. The duty involved in the shortages amounted to Rs. 42,069, which the appellants deposited. This discrepancy led to the issuance of a show cause notice culminating in an order by the Assistant Commissioner confirming the duty demand, confiscating the excess material, and imposing penalties.

2. The Assistant Commissioner's order was challenged in appeal, where the appellant argued that the shortages were due to differences in accounting practices between recording and weighing goods. They cited a Board Circular allowing for a permissible limit of 1% for such discrepancies in steel industries. The Tribunal found merit in this argument, noting that the shortages were within permissible limits and no evidence suggested clandestine removal of goods. The statements of the appellants during the visit were also not incriminating.

3. Considering the lack of evidence supporting the duty demand, confiscation, and penalties, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants. The decision provided consequential relief to the appellants, emphasizing the importance of permissible limits and accounting practices in determining duty liabilities and penalties in excise matters.