2013 (12) TMI 1493 - AT - Central Excise

Shortage of goods - total shortage of 216.447 MT of M.S. Bars and Angles (final products) from the recorded balance was noticed - shortage stand detected on the basis of average method - demand of duty with penalty - Held that - In the absence of any corroborative evidences to prove clandestine removal, the fact of such shortages computed on the basis of average method cannot be held to be relatable to clandestine activities. Further, there is no admission in the statement of the partner as regards clandestine removal. It is well settled law that clandestine activities are required to be proved by sufficient and positive evidences. The same cannot be upheld on the basis of doubts - appeal rejected - decided against Revenue.

Summary

Issues:
1. Shortage of M.S. Bars and Angles during a surprise check by Central Excise officials.
2. Confirmation of duty demand and penalty imposition based on shortage.
3. Method of measurement for calculating shortages and excess.
4. Lack of evidence to prove clandestine removal.
5. Requirement of sufficient and positive evidence for proving clandestine activities.

Analysis:

1. The case involved a surprise check by Central Excise officials where a shortage of 216.447 MT of M.S. Bars and Angles was noticed. The partner of the factory admitted to the shortage but attributed it to average weighment rather than actual weighment.

2. The adjudicating authority confirmed the demand of duty amounting to &8377; 5,79,645 on the goods found short, along with the imposition of an equal penalty. The Revenue filed an appeal against the order passed by the Commissioner (Appeals).

3. The Commissioner (Appeals) considered the method used by Revenue officers for calculating shortages, which involved random sampling. He noted that there was no evidence to support the charge of clandestine removal and that the shortages detected were changeable and not indicative of clandestine activities.

4. The entire case of the Revenue was based on the shortage detected during the visit and the partner's statement. However, without corroborative evidence to prove clandestine removal, the shortages calculated using the average method could not be linked to clandestine activities.

5. The judgment emphasized the requirement of sufficient and positive evidence to prove clandestine activities, stating that doubts were insufficient. The appellate authority's findings were upheld, rejecting the Revenue's appeal as there was no evidence of clandestine removal despite the shortages.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented, and the reasoning behind the decision to reject the Revenue's appeal.