2013 (10) TMI 26 - HC - Central Excise

Duty on Finished Goods Short Found - Whether the CESTAT was justified in upholding the order of the Adjudicating Authority in dropping the demand of excise duty on finished products found short during the course of search Held that - The assessee on the basis of the registers maintained and seized during the course of search had demonstrated that there was no shortage except and accordingly demand of duty on man-made fabrics in excess had been dropped - It was not the case of the revenue that the entries made in the lot registers maintained by the assessee to the effect that the goods were lying in the factory at different stages of production were erroneous or contrary to the inventory made - In the absence of any evidence to establish that the entries made in the lot registers were not in consonance with quantity of semi-finished goods found during the course of search, no fault can be found with the decision of the authorities below in discarding the statement/panchanama recorded on the date of search as the records found during the course of search establish to the contrary Decided against the revenue.

Summary

Issues:
- Whether the CESTAT was justified in upholding the order of the Adjudicating Authority in dropping the demand of excise duty on finished products found short during the search.

Analysis:
The case involved a dispute regarding the demand of excise duty on man-made fabrics found short during a search. The Commissioner of Central Excise confirmed a duty demand on a certain quantity of short fabrics, but the Adjudicating Authority dropped the proceedings regarding the remaining quantity. The Revenue challenged this decision, leading to an appeal before the CESTAT, which upheld the adjudication order. The Revenue further appealed this decision.

The Revenue contended that the CESTAT erred in accepting a reconciliation statement submitted by the Director, instead of the statement recorded during the search. The CESTAT's decision was based on the lot registers seized during the search, which contradicted the statement recorded on the search date. The CESTAT found no fault in discarding the initial statement based on the evidence from the seized documents.

The Adjudicating Authority and the CESTAT concluded that the assessee demonstrated through the seized registers that there was no shortage of fabrics, except for a specific quantity. The Revenue failed to prove any discrepancies in the entries made in the lot registers. As the records from the search established the accuracy of the entries, the decision to drop the duty demand on the excess quantity was upheld.

Ultimately, the High Court dismissed the appeal, stating that there was no merit in challenging the decision. The appeal was rejected, and no costs were awarded.