2018 (5) TMI 1453 - AT - Central Excise

Clandestine removal - excesses of finished goods - shortage of raw material - Held that - Revenue has not produced any evidence to ascertain the fact that the goods have been physically weighed, in that circumstance, the benefit of doubt goes in favour of the appellants - RG-1 register was updated upto 30.8.2012 wherein the production of 31.8.2012 was not entered in the RG-1 register. It is not the case of the Revenue that on 30.08.2012, the factory of the appellant was closed. If the departmental officers found how much is the quantity manufactured on 30.8.2012 then also the excess/shortage of raw materials and finished goods could have been deducted. In the absence of this, the allegation of shortage of raw materials and excess of finished goods is not sustainable. Confiscation and penalty not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of redemption fine and penalty on the appellants based on alleged excess of finished goods and shortage of raw materials during stock verification.

Analysis:
1. Imposition of Redemption Fine and Penalty:
- The case involved a surprise visit by Central Excise officials to the appellant's factory, resulting in the seizure of goods due to alleged discrepancies in stock. Subsequently, a show cause notice was issued leading to the imposition of a redemption fine of ?15.10 lakh and a penalty of ?2 lakh on the main party, along with penalties of ?1 each on the company directors.

2. Appellant's Defense:
- The appellant's counsel argued that the stock verification was done based on eye estimation as no weighment slips were provided to prove physical verification. The appellant denied admitting to any shortages or excesses, challenging the confiscation of goods and imposition of penalties. Reference was made to a previous tribunal judgment to support the defense.

3. Revenue's Position:
- The Revenue contended that the appellant did not dispute the method of weighment during the investigation, indicating an admitted shortage or excess of goods. It was argued that since the goods were given under superdginama without challenge, confiscation was justified.

4. Judgment and Analysis:
- After hearing both parties, the judge reviewed the evidence and found discrepancies in the weighment process. The judge noted that the Revenue failed to provide evidence of physical weighment of goods, leading to doubts regarding the accuracy of stock verification. Citing a previous tribunal judgment, it was concluded that the shortage or excess of goods could not be proven against the appellants.

5. Additional Considerations:
- The judge highlighted that the RG-1 register was not updated for the production on the day in question, casting further doubt on the allegations of shortages and excesses. The absence of crucial production data undermined the Revenue's case.

6. Final Decision:
- Ultimately, the judge ruled in favor of the appellants, stating that since the goods were not liable for confiscation, the question of imposing penalties did not arise. The impugned order was set aside, and the appeals were allowed with any consequential actions to follow.

This detailed analysis of the judgment showcases the legal arguments presented, the evaluation of evidence, and the application of relevant case law to reach a final decision in favor of the appellants.