2012 (11) TMI 1029 - AT - Central Excise

Duty demand - Shortage in stock - Clandestine removal of goods - Held that - Revenue has relied upon the statement of Sh. Subhash Goyal, accepting such shortages and deposing that the goods might have been cleared without the cover of invoice. The fact is that the said statement was withdrawn by Sh. Subhash Goyal subsequently and there is a letter of the Director of the Company on record, I find that there is no other evidence available indicating the clandestine clearance of the ingots. There are umpteen number of decisions holding that there is no other evidence available on record indicating the clandestine clearance of the final product, charges of clandestine removal can not be upheld on the basis of sole retracted statement. The same are required to be proved by producing sufficient & positive evidence of clandestine removal. Apart from that as already observed the weighment of the stock was not actually done and as such shortage arrived at on the basis of arithmetical and calculative methods cannot be accepted - Decided in favour of assessee.

Summary

Issues:
Shortage of M.S. Ingots in stock, acceptance and retraction of statement by company representatives, validity of shortages determined without actual weighment, reliance on retracted statement for clandestine clearance, sufficiency of evidence for clandestine removal.

Analysis:
The case involved the appellant, engaged in the manufacture of M.S. Ingots and MS Castings, where a shortage of 74.983 MT of M.S. Ingots was found during a visit by Central Excise Officers. Initially, the Supervisor of the company accepted the shortage and agreed to deposit the duty, attributing it to goods being sold without bills. However, both the Supervisor and the Director later retracted their statements, claiming the shortages were based on eye-estimation and not actual weighment.

The proceedings initiated against the appellant resulted in a demand confirmation and penalty imposition by the Adjudicating authority, which was upheld by the Commissioner (Appeals). The main argument raised by the appellant was the lack of actual weighment of the ingots, leading to shortages determined based on assumptions. The Commissioner (Appeals) noted the proper stock-taking process followed by the officers, which involved weighing ingots to calculate the shortage accurately.

The appellate tribunal agreed with the appellant that the shortages could not be considered real due to the absence of actual weighment. The tribunal also highlighted the retracted statement of the Supervisor and the letter from the Director, emphasizing the need for sufficient and positive evidence to prove clandestine removal. Without concrete evidence beyond the retracted statement and considering the method of shortage calculation, the tribunal concluded that charges of clandestine removal could not be upheld.

In light of the discussions and findings, the tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant. The judgment was pronounced in open court on 27-11-2012.