2015 (10) TMI 1954 - AT - Central Excise

Duty demand - CENVAT Credit - Clandestine clearance of goods - held that - goods were not actually weighed and shortages were recorded on the basis of the average weight per ingot determined by multiplying the sample with total number of ingots. - there is no evidence of clandestine removal of the goods. The appellant s representative had only accepted the shortages and there is no inculpatory statement admitting clandestine removal of the such alleged short found goods. - By following the decision of the Hon ble High Court 2011 (8) TMI 896 - ALLAHABAD HIGH COURT , I set aside the impugned order - Decided in favour of assessee.

Summary

Issues: Alleged clandestine clearance of MS Ingots based on shortage detected during inspection.

Analysis:
1. The appellant, engaged in manufacturing MS Ingots, faced proceedings due to a shortage of 107.831 M.T. of MS Ingots detected during a visit by Central Excise Officers. The appellant admitted the shortage and debited duty from their Cenvat account.

2. Proceedings were initiated against the appellant for alleged clandestine clearance of the ingots, leading to an order by the original adjudicating authority upheld by the Commissioner (Appeals).

3. The Panchnama drawn during the visit recorded the physical stock taking method based on average weights of ingots, without actual weighing. Shortages were determined by multiplying the average weight with the total number of ingots found.

4. Notably, there was no evidence of clandestine removal of the goods. The appellant's representative only acknowledged the shortages without admitting to any clandestine removal.

5. Referring to a judgment by the Allahabad High Court, it was established that shortages of finished goods, without evidence of clandestine removal, cannot imply duty evasion. Following this precedent, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.