2016 (3) TMI 1171 - AT - Central Excise

Investigation - Shortage of stock - Interest - Penalty - Held that - I find that in a short span of time physical stock taking of such a huge stock of 4762.485 MT of ingots is not possible. Admittedly, in this case the stock taking was done on average basis - I find that if such method of weighment has been adopted there are certainly, variation will take place. In this case the shortage of only 74 MT in a stock of around 5000 MT which is a meagre one. Due to such variation, without corroborative evidence, the allegation of clandestine removal of goods cannot be proved. As no corroborative evidence has been brought on record by the respondents, the alleged shortage cannot held clandestine removal of goods - Appeal allowed.

Summary

Issues:
Appeal against duty demand, interest, and penalty imposition based on stock shortage during investigation.

Analysis:
The appellant contested the demand of duty, arguing that payment made during investigation should suffice, as per Section 11A(5)(6). The stock taking method was questioned, claiming no shortage existed. The appellant relied on a previous decision. The Revenue stood by the impugned order.

Upon review, the Tribunal found the stock taking method questionable due to significant variations. The shortage was minimal, and no evidence of clandestine removal was presented. The Tribunal highlighted Section 11A(5)(6)(7) provisions, emphasizing that paying duty, interest, and 25% penalty should conclude the matter without a show cause notice. As the Revenue lacked evidence, the allegation of clandestine removal was deemed unsustainable.

The Tribunal set aside the impugned order, noting the appellant's compliance with payment requirements. The appeal was allowed with consequential relief.