1996 (10) TMI 280 - AT - Central Excise

Summary

Issues:
1. Discrepancy in the stock of molasses leading to demand of duty and penalty.
2. Reliability of dip measurement method in determining the weight of stored molasses.
3. Effect of earlier stock verification on the alleged shortage in the present proceedings.

Analysis:
1. The case involved a discrepancy in the stock of molasses stored by the appellants, leading to a demand of duty and penalty by the Collector of Central Excise, Jaipur. The physical stock found by Central Excise Officers was lower than the recorded balance, indicating a shortage of molasses. The Collector's order confirmed the demand of duty and imposed a penalty, prompting the appeal by the appellants against the decision.

2. The appellants argued that the alleged shortage was a result of an earlier stock verification that had shown an artificial excess, which they claimed was due to the unreliable dip measurement method used by the Department to weigh the stored molasses. They cited a Tribunal decision where a similar charge based on dip measurement was dropped, emphasizing the unreliability of the method. The Department, represented by Shri D.S. Mallick, contended that the shortage was admitted by the Chief Chemist of the appellant company and was not connected to the earlier stock verification's excess, as they related to different tanks.

3. The Tribunal, after considering both sides' submissions, found merit in the appellants' argument regarding the unreliability of dip measurement in determining the weight of molasses stored under varying conditions. The appellants highlighted the impact of temperature variations on molasses density and volume, leading to apparent but not real weight discrepancies. The Tribunal noted that the earlier alleged excess weight was subject to variation due to seasonal changes, making the charge unsustainable. Additionally, discrepancies in the Department's method of calculation were pointed out by the appellants, leading to a correction in the alleged excess weight. The Tribunal disagreed with the Collector's finding on the shortage, setting it aside and allowing the appeal based on the inconsistencies in the stock verification process and the unreliable nature of the dip measurement method.

This detailed analysis of the judgment showcases the issues involved, the arguments presented by both parties, and the Tribunal's reasoning in overturning the Collector's decision based on the unreliability of the stock verification process and the dip measurement method.