2007 (8) TMI 611 - AT - Central Excise

Summary

Issues:
The judgment involves the confirmation of duty against the appellant for shortages in raw material detected during a visit to the factory, and the imposition of penalty based on the findings.

Shortages in Raw Material:
The duty was confirmed against the appellant due to shortages in raw material detected during a visit to the factory. The discrepancies were noted between the physical stock and the recorded balance in the RG-23A Part-I. The appellant's Authorized Representative explained that the raw material was issued for production via Material Issue Notes, which were not recorded in the RG-23A Part-I, leading to the notion of shortage.

Contention of the Appellant:
The appellant contended that the shortages detected were not real but pseudo, as the Material Issue Notes reflected the issuance of raw material for production. The Adjudicating Authority did not consider the Material Issue Notes, casting doubt on their genuineness. The appellant argued that without evidence disproving the authenticity of the notes, they should not have been disregarded. The appellant, a company paying substantial duty annually, asserted that clandestine removal of raw materials to the extent of Rs. 5.37 lakhs was implausible.

Judgment and Conclusion:
After considering the Material Issue Notes, the Tribunal found that the shortages were negligible, falling within permissible tolerance levels. Additionally, apart from the detected shortages, there was no evidence indicating clandestine clearance of the raw material by the appellant. Citing a precedent, the Tribunal concluded that demanding duty on stock shortages was unjustified. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and granting consequential relief.