2014 (9) TMI 868 - AT - Central Excise

Shortage of goods found - Redemption fine imposed - Penalty - Held that - Panchnama clearly brings out the shortage as well as excess of the respective goods vis-a-vis. their statutory records. As regards the contention of the appellants that the discrepancy was due to the mental stress of the person who maintained the statutory records as he was disturbed because of the disappearance of his wife and son, the ld. Advocate admitted that he is not aware when this disappearance took place or whether any FIR was lodged with the Police. Even if this contention is taken on record, the mistake in the accounts can be corrected and the appellants would have submitted the corrected version of the statutory records to explain the discrepancy if the discrepancy was indeed because of mistake in the accounts. It is evident that no such corrected accounts were submitted to explain the shortage/excess which shows that the alleged excess/shortage was real and not merely a consequence of mistake in the accounts. The appellants also admitted the said shortage/excess and the Panchnama recording the said excess/shortage has never been questioned by the appellants. The shortage/excess found are substantial and that there is no plausible explanation whatsoever put forth explaining the same so far. There is no assertion that the accounts were incorrectly maintained or that the Panchnama was defective. The goods involved are such that they cannot disappear due to natural factors. The shortage/excess were clearly admitted by the appellants and the Panchnama certifies the same. In the circumstances it is axiomatic that as admitted by the appellants, such shortage can be caused only by removal of the goods. It is not a mere conjecture but an undeniable fact that shortage of the goods, in the absence of any other reason, can be caused only by their removal. The excess of certain finished goods found is also a matter of fact which is not disputed. None of the case laws cited by the appellants deal with such facts where the assessee has admitted the offence, not retracted the statement, the Panchnama is proper and not questioned at any stage as suffering from any infirmity and there has been no accounting mistake. - Decided against Assessee.

Summary

Issues:
1. Duty demand confirmation with interest and penalty on short quantity of finished goods.
2. Imposition of redemption fine on excess finished goods.
3. Contention of discrepancy due to mental stress of officer.
4. Reference to case laws supporting the appellant's case.
5. Panchnama evidence and admission of shortage/excess by appellants.
6. Lack of plausible explanation for substantial shortage/excess of steel items.
7. Admitted removal of goods causing shortage.
8. Comparison with cited case laws and their applicability.
9. Rejection of the appeal based on findings.

Analysis:
1. The appeal challenged the confirmation of duty demand amounting to Rs. 2,74,976 with interest and penalty on the shortage of certain finished goods. Additionally, a redemption fine of Rs. 9,59,625 was imposed on excess finished goods.

2. The appellants argued that the discrepancy was due to the mental stress of the officer maintaining records. They cited case laws like Ranasaria Polypack Pvt. Ltd. and others to support their claim.

3. The respondent contended that the Panchnama was prepared as per the appellant's methodology, and the appellants admitted the shortage and excess of goods in their statement. References to J.C. Rolling Mills Pvt. Ltd. and CCE, Indore Vs. Kashyap Sweetners Ltd. were made.

4. The judge considered both sides' submissions, emphasizing that the Panchnama clearly showed the shortage and excess of goods. The contention of mental stress was dismissed due to lack of evidence and corrected accounts not being submitted.

5. The judge noted the substantial shortage/excess of steel items with no plausible explanation provided. The appellants admitted the discrepancies, and the Panchnama certified the same.

6. It was concluded that the shortage could only be caused by the removal of goods, as admitted by the appellants. The excess of finished goods was also acknowledged. Case laws were cited to support the findings.

7. Referring to CCE, Indore Vs. Kashyap Sweetners Ltd., the judge highlighted the burden on the respondents to explain shortages, failing which liability was accepted. The impugned order was upheld, and the appeal was rejected based on the findings.

This detailed analysis covers the issues raised in the judgment, including the arguments presented by both parties, the examination of evidence, and the application of relevant case laws to reach the final decision.