2017 (12) TMI 542 - AT - Central Excise

Clandestine removal - shortage of stock - whether the appellant was engaged in the manufacture of M.S. Billets & M.S. Bars duly have rightly been levied on apparent shortage of stock? - validity of SCN - Held that - from a copy of the Panchnama on record that there is no record of weighment, forming part of the Panchnama. Thus, the stock verification of the finished goods have been done by way of eye estimation only. Further there is variation of 10%, which is normal in the facts and circumstances of the case, where the stock verification of the finished goods has been done by way of eye estimation - SCN is vague and presumptive - appeal allowed - decided in favor of appellant.

Summary

Issues:
Levy of duty on apparent shortage of stock in the manufacture of M.S. Billets & M.S. Bars.

Analysis:
The appeal dealt with the question of whether the appellant, engaged in the manufacture of M.S. Billets & M.S. Bars, was rightly levied duty on an apparent shortage of stock. A physical stock verification was conducted at the factory premises of the appellant, revealing a shortage in TMT Bars. The value of the short-found TMT Bars was calculated based on the latest invoice, leading to the imposition of Central Excise duty. The Stock Verification Report was prepared on the spot, documenting the proceedings of the stock verification. The Factory Manager's statement confirmed the shortage and the subsequent deposit of the Central Excise duty amount. The Revenue suspected clandestine clearance and issued a Show Cause Notice proposing duty recovery, penalty, and confiscation of goods. The Original Authority confirmed the demand and imposed penalties, which were upheld by the Commissioner (Appeals).

The appellant contended that the stock taking was done casually through eye estimation without actual weighment, and there was no evidence of clandestine clearance. The appeal to the Tribunal argued that the demand was presumptive and not based on legal provisions. The Tribunal considered the lack of weighment records in the Panchnama and the 10% variation in stock verification done through eye estimation. It concluded that the demand was vague and presumptive, hence not sustainable. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant any consequential relief as per the law.

In summary, the judgment revolved around the issue of duty levy on an apparent shortage of stock in the manufacture of M.S. Billets & M.S. Bars. The Tribunal found the demand based on eye estimation and lacking weighment records to be vague and presumptive, ultimately ruling in favor of the appellant and setting aside the original order.