2001 (2) TMI 714 - AT - Central Excise

Summary

Issues Involved:
1. Validity of internal stock verifications conducted by the assessee.
2. Discrepancies between physical stock and RG 1 records.
3. Acceptance of responsibility and payment of duty by the assessee.
4. Burden of proof regarding discrepancies and clandestine removal.

Detailed Analysis:

1. Validity of Internal Stock Verifications:
The Revenue argued that the internal stock verifications conducted by the assessee were valid and accepted by the assessee themselves. They contended that the discrepancies noticed during these verifications should be considered true and valid. The assessee, however, maintained that the variations in stock were with reference to their computer accounts and not with RG 1 records. The Tribunal found a conflict in the grounds presented by the Revenue, noting that if the variations were between the company's stock taking and computer records, it did not necessarily involve RG 1 figures. Therefore, the Tribunal did not accept the Revenue's grounds to set aside the original order.

2. Discrepancies Between Physical Stock and RG 1 Records:
The Revenue claimed that the discrepancies between the physical stock and RG 1 records indicated malpractices and evasion of duty. However, the Tribunal noted that the discrepancies were between actual stocks and computerised accounts, not necessarily RG 1 figures. The Tribunal held that the burden of proof lies with the Revenue to first establish a discrepancy between RG 1 stock and actuals before the onus shifts to the assessee. Since the discrepancies were not between RG 1 and actuals, the onus did not shift to the assessee.

3. Acceptance of Responsibility and Payment of Duty:
The Revenue argued that the assessee had accepted responsibility for the lapses and paid part of the duty demanded. However, the assessee clarified that the payment was made voluntarily to avoid litigation and with the right to claim a refund upon producing adequate evidence. The Tribunal found that the payment did not constitute an acceptance of liability. The Tribunal also noted that the Collector had redetermined the valuation of the goods and found that the variations were due to counting errors. The Tribunal concluded that the grounds for appeal on this issue were not valid.

4. Burden of Proof Regarding Discrepancies and Clandestine Removal:
The Revenue contended that the burden of proof lies with the assessee to explain the discrepancies between actual stocks and RG 1 records. The Tribunal agreed that the onus would shift to the assessee only if the Revenue first proved a discrepancy between RG 1 stock and actuals. Since the discrepancies were between actuals and computerised accounts, the onus did not shift to the assessee. The Tribunal also noted that no duty can be demanded on excess goods without proving clandestine removal. The Tribunal found no grounds to set aside the order regarding the shortages and excesses found by the officers.

Conclusion:
The Tribunal dismissed the appeal, upholding the Collector's findings that the discrepancies were due to counting errors and that no evidence of clandestine removal was established. The Tribunal emphasized the importance of corroborative evidence in proving clandestine removal and found that the Revenue failed to meet this burden of proof.