2017 (8) TMI 103 - AT - Central Excise

Shortage of stock - The main contention of the ld.Consultant is that stock verification had not been undertaken properly and in the absence of any responsible person available in the factory, no representative was present at the time of stock verification - Held that - I find that Shri Arun Kr. Das, partner of the assessee firm was present at the factory and also recorded the statement dated 26.03.1999 during stock verification. It is seen that on 26.03.1999, Shri Arun Kr. Das, Partner of the assessee and Shri Joydeep Sutradhar, Manager of the assessee signed the stock verification reports. Therfore, I do not find any force in the submission of the ld.Counsel that the stock taking was undertaken in the absence of any responsible person in the factory. Excess quantity of labeled packed Biris without packing - Held that - The ld.Counsel admitted a part of the shortage of unbranded/unbaked Biris ascertained on the basis of the notebooks and disputed the demand of duty on the balance quantity as the Revenue failed to prove the charge of clandestine removal. I am unable to accept the contention of ld.Counsel for the reason that the appellant cannot accept the evidence of note books partly, unless it has submitted a statement of reconciliation of the said notebook. In the present case, the appellant failed to reconcile the entries in the notebooks and therefore, the demand of duty on the balance quantity, shortage of unbranded and unbaked Biris is justified. The appellant had not placed any reconciliation of the entries in the notebooks with the statutory records. The ld.Counsel had not disputed the recovery of the notebooks from the premises of the assessee. It has also not disputed the corroboration of the entries of the note book and in the aeized private packing serial register. Therefore, the contention of the ld.Counsel is without any force on this ground also. Penalty u/s 11AC - Held that - the appellant accepted partly the shortage of unbranded/unbaked Biris by way of adjustment of excess labeled Biris based on the notebooks and rough private books. They cannot deny the demand of duty on the balance quantity on the basis of the same evidence, as they fail to clarify the details of entries in the said notebook as observed by the adjudicating authority. As it is a case of charge of clandestine removal of goods, the imposition of penalty under section 11AC is warranted. Penalty on partners - Held that - the penalty on the assessee was imposed under section 11AC of the Central Excise Act, 1944. In such situation, imposition of penalty on the partners are excessive. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Stock verification discrepancies, demand of duty, penalties, charge of clandestine removal, evidence from notebooks, statement of contractors, imposition of penalties on partners.

Stock Verification Discrepancies:
The case involved discrepancies found during stock verification at the appellant's factory, including shortages and excess quantities of labeled and unlabeled Biris. The Central Excise officers conducted the verification and issued a show cause notice proposing confiscation of excess Biris, duty demand, and penalties. The adjudicating authority confirmed the duty demand and imposed penalties. The Tribunal confirmed the duty demand for a specific quantity of Biris but remanded the case for readjudication on other charges.

Demand of Duty and Penalties:
The Commissioner of Central Excise, in de novo adjudication, confirmed a substantial demand of duty along with interest and imposed penalties on the appellant and its partners. The appellant contested the demand, arguing that stock verification was not conducted properly and challenging the charge of clandestine removal. The appellant's representative highlighted discrepancies in the stock verification process and the lack of statements from certain individuals involved in the case.

Charge of Clandestine Removal and Evidence from Notebooks:
The appellant disputed the demand of duty based on entries in notebooks, claiming that the Revenue failed to prove the charge of clandestine removal. However, the Tribunal found that the appellant failed to reconcile the entries in the notebooks with statutory records, justifying the duty demand on the balance quantity of Biris. The Tribunal emphasized the importance of clarifying details of entries in the notebooks to contest the charge of clandestine removal effectively.

Statement of Contractors and Imposition of Penalties:
The appellant raised concerns about the absence of statements from contractors and the basis for imposing penalties. The adjudicating authority provided detailed findings regarding the recovery of notebooks, certification by the appellant's partner, and corroboration of entries in the seized records. The Tribunal noted that the appellant did not dispute the recovery of notebooks or the corroboration of entries, leading to the imposition of penalties under section 11AC of the Central Excise Act, 1944. The Tribunal modified the impugned order by adjusting the demand of duty and setting aside penalties imposed on certain partners.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning behind the decision, emphasizing the importance of proper documentation and reconciliation of records in excise duty cases.