1995 (7) TMI 189 - AT - Central Excise

Summary

Issues:
1. Shortage of hexane found during inspection.
2. Confirmation of demand and penalty imposition.
3. Lack of evidence for clandestine removal.
4. Duty payment obligation under Rule 196.
5. Verification process discrepancies.
6. Lack of physical verification for the plea of 18,000 Litres of hexane.
7. Decision on the revenue appeal.

Analysis:
The appeal was filed against an order confirming a demand and imposing a penalty due to the discovery of a shortage of 29,595 Litres of hexane during an inspection by Central Excise Officers. The Deputy Collector confirmed the demand and penalty, citing lack of satisfactory explanation for the shortage. However, the Collector (Appeals) set aside the order, noting the absence of evidence regarding clandestine removal of goods by the Department. The Revenue argued for the restoration of the Deputy Collector's order based on this aspect.

During the hearing, no representation was made for the respondents. The Judge reviewed the records and observed that the Department failed to provide evidence proving clandestine removal of the goods. The Collector (Appeals) also highlighted that there was no reason to clear goods under Chapter X without duty payment when other manufacturers could obtain duty-free hexane under the same chapter. The obligation to pay duty under Rule 196 for unaccounted goods was emphasized, shifting the onus onto the licensees claiming concessions.

The Judge pointed out discrepancies in the verification process, noting that the stock verification was not conducted in accordance with the approved calibration chart. This raised doubts about the authenticity of the shortage figures. Additionally, the lack of satisfactory findings regarding the plea of 18,000 Litres of hexane put forward by the respondents during questioning further weakened the case for the Revenue. The Judge highlighted the failure to conduct physical verification to verify this plea, which should have been a crucial step in the investigation process.

Ultimately, the Judge rejected the revenue appeal and upheld the Collector (Appeals) order, citing the lack of proper stock verification, discrepancies in the process, and the failure to investigate the respondents' plea adequately as reasons for the decision.