2018 (1) TMI 1006 - AT - Central Excise

Clandestine removal - shortage of stock - case of appellant is that such shortages in this stock were not real and were pseudo inasmuch as it is not possible for the officers to weigh about 3500 M.T. of stock in 10 hours, spent by them in the factory - Held that - apart from the fact that the Revenue has not enable to substantiate the actual weighment of the material, the entire case of the Revenue is based on only to the shortages detected at the time of visit - Inasmuch as apart from the shortages there is no other evidence produced by the Revenue, there are no merits in the Revenue s stand - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged clandestine removal of final products involving duty shortages.

Analysis:
1. The appellant, engaged in manufacturing various iron and steel items, faced allegations of duty shortages amounting to approximately 5.44 lacs after a visit by Central Excise Officers in 2008.
2. The appellant's representative acknowledged the shortages and paid the duty but failed to provide a satisfactory explanation during the officers' visit.
3. Subsequently, a show cause notice was issued in 2009, accusing the appellant of clandestine removal of final products based on the detected shortages, leading to a demand confirmation and penalty imposition upheld by the Original Adjudicating Authority and the Commissioner (Appeals).
4. The appellant argued that the shortages were not genuine, questioning the officers' ability to weigh about 3500 M.T. of stock in a limited time frame without proper stocktaking procedures or weighment slips, emphasizing the lack of incriminating statements or evidence linking the shortages to duty evasion.
5. The Revenue contended that the unexplained shortages indicated clandestine removal by the appellant, supporting the lower authorities' decisions.
6. Upon review, the Tribunal found the Revenue's case solely relying on the detected shortages without substantial evidence beyond them. Citing legal precedents, including Commissioner Vs. Minakshi Casting and Amba Steels Vs. Commissioner of Central Excise, the Tribunal concluded that mere shortages do not prove clandestine removal without additional evidence. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the appellant.