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2013 (8) TMI 314 - AT - Central ExciseClandestine Removal - Appellants are manufacturer of Black Steel Pipes and GI Pipes - During the course of physical verification 768 No. (29.500 MT) of Steel Pipes and Tubes were found short by the Preventive officers in the stock of finished goods Statement of Shri Narendra Singh, Factory Manager was recorded under Section 14 of the Central Excise Act, 1994 in which he admitted the above shortage of 768 Nos. weighing 29.500 MT in the finished good - Appellants challenging the Order in Appeal on the ground that shortage was based on eye estimation and there was not physical verification Held that - Numbers are mentioned in the Annexure to Panchnama and therefore it is wrong to say that shortage is based on eye estimation. Moreover Shri Narendra Singh Factory Manager had admitted the shortage in the pipes as in his the statement - Shortage of the goods in the factory which is no explained by the factory manager - Concluded that goods were removed without payment of Central Excise duty Decided against the Assessee.
Issues:
1. Shortage of steel pipes and tubes found during physical verification. 2. Admissibility of duty liability based on shortage. 3. Challenge to the Order in Appeal by the appellant. 4. Arguments presented by the appellant and the Revenue. 5. Decision on the appeal and penalty reduction. Issue 1: Shortage of steel pipes and tubes found during physical verification The case involves M/s Swastik Pipes Ltd., where a team of Preventive Officers of Central Excise Commissionerate visited the factory premises and found a shortage of 768 Nos. (29.500 MT) of Steel Pipes and Tubes during physical verification. The Factory Manager admitted the shortage in a statement recorded under Section 14 of the Central Excise Act, 1994. Issue 2: Admissibility of duty liability based on shortage The appellant challenged the duty liability, arguing that the shortage was due to inaccurate eye estimation and not a deliberate act of removal without payment of Central Excise duty. However, the Tribunal noted that the shortage was based on physical verification, as numbers were clearly mentioned in the Annexure to Panchnama, and the Factory Manager had admitted the shortage. The contention that the shortage was based on eye estimation was rejected. Issue 3: Challenge to the Order in Appeal by the appellant The appellant relied on previous decisions in similar cases to support their argument. However, the Tribunal emphasized that each case of clandestine removal is unique, and the decisions cited by the appellant were not applicable as the present case involved physical verification of goods with clear numbers. Issue 4: Arguments presented by the appellant and the Revenue The appellant argued that the shortage was due to eye estimation, while the Revenue contended that the Show Cause Notice was based on physical verification and the shortage was admitted by the Factory Manager. Both lower authorities confirmed the duty demand against the appellant. Issue 5: Decision on the appeal and penalty reduction The Tribunal upheld the Order in Appeal regarding the confirmation of duty but reduced the penalty to 25% of the duty amount since duty was paid before the Show Cause Notice, and 25% of the penalty was paid within 30 days of the adjudication order. The appeal was disposed of accordingly. This judgment highlights the importance of accurate physical verification in determining duty liability and the significance of clear evidence in cases involving shortages of goods subject to Central Excise duty.
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