2014 (1) TMI 215 - AT - Central Excise

Shortage of stock Physical verification conducted - Waiver of Pre-deposit Held that - The case is one of appreciation of evidence relating to the stock of goods - Prima facie, there is no sound basis as to how the stock position as on 20.09.2007 could be adopted by the department - some shortages were noticed in the physical stock during the joint verification exercise carried on 06.12.2007 - the actual shortage or otherwise could be determined only at the time of disposal of the Appeal by analysing the evidences adduced by both sides Assessee directed to deposit Rupees Twenty Five Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
Waiver of pre-deposit of duty, penalty imposed under section 11AC, personal penalty under Rule 26 of Central Excise Rules, 2002.

Analysis:
The judgment revolves around the applications seeking waiver of pre-deposit of duty, penalty, and personal penalty imposed on the Director. The Ld. Sr. Advocate for the applicants argued that discrepancies in stock noticed during a joint physical verification were incorrectly used by the department, as they based their findings on a stock verification report from the Income Tax authorities at a later date. The Advocate disputed the methodology adopted by the department and offered to deposit a specific amount. The Revenue, represented by the Ld. A.R., supported the findings of the adjudicating authority.

Upon hearing both sides and examining the evidence, the Tribunal found that the case involved the appreciation of evidence regarding the stock of goods as of a specific date. While discrepancies were noted during the joint verification on 06.12.2007, the department relied on a later report from the Income Tax authorities. The Tribunal questioned the basis for adopting the stock position from the later date. Despite the dispute raised by the Ld. Sr. Advocate, the Tribunal acknowledged the shortages observed during the joint verification. It was determined that the actual shortage could only be ascertained during the appeal process by analyzing the evidence presented by both parties.

In light of the circumstances, the Tribunal accepted the offer made by the Ld. Advocate to deposit a specified amount. Applicant No.1 was directed to deposit the said amount within eight weeks. Upon deposit, the balance of dues adjudged against both applicants would be waived, and recovery stayed during the appeal's pendency. Failure to comply with the deposit requirement would lead to the dismissal of both appeals without further notice. The compliance report was scheduled for a specific date.

This judgment highlights the importance of evidence in determining liabilities in cases involving duty, penalties, and personal penalties under the Central Excise Rules. The Tribunal emphasized the need for a thorough analysis of evidence during the appeal process to establish the actual facts regarding shortages and stock discrepancies.