2015 (10) TMI 331 - AT - Central Excise

Duty demand - Clandestine removal of goods - Shortage of goods - Penalty u/s 11AC - Held that - Entire shortage of CTD bars was noticed during physical stock taking. The department has noticed shortage of 104.46 MTs. I find that there was no further investigation carried out except recording of statement from the M.D. of appellant company. The department has not established actual shortage so as to attribute clandestine removal. - any shortage of finished goods not accounted in the records is liable for excise duty. Every shortage of finished goods cannot be attributed as clandestine removal and unless it is proved to the contrary with evidence. Further, I find that adjudicating authority has demanded duty on 111.82 MTs whereas the actual shortage was 102.476 MTs as per the SCN. I find that appellants are liable for payment of excise duty on the quantity of 102.476 MTs found short in their accounts on the date of stock taking. - appellant is liable for excise duty and it is restricted to actual shortage of 102.476 MTs found short during physical stock taking and the demand is upheld to that extent. Penalty is set aside. - Decided partly in favour of assessee.

Summary

Issues: Appeal against confirmation of excise duty demand and penalty for shortage of finished products during stock taking.

Analysis:
1. The appellant failed to appear for the appeal hearings despite multiple notices, leading to the appeal being taken up on merits.
2. The impugned order confirmed the demand of excise duty and imposed penalties for the shortage of finished products during stock taking.
3. The appellant argued that there was no evidence of clandestine removal, and the shortage was based on physical stock taking without actual weighment or stock verification.
4. The appellant contended that the show-cause notice (SCN) was time-barred and that no evidence was submitted by the department to support the demand.
5. The department justified the penalty and demand based on the admission of shortage by the Managing Director of the appellant company.
6. The Tribunal found that the department did not establish actual shortage to prove clandestine removal and that the shortage was noticed during physical stock taking without further investigation.
7. The Tribunal held that every shortage of finished goods cannot be assumed as clandestine removal without evidence to the contrary.
8. The Tribunal relied on precedents to support its decision, emphasizing the need for evidence to attribute shortage to clandestine removal.
9. The Tribunal upheld the demand for excise duty on the actual shortage found during stock taking but set aside the penalty based on the lack of evidence for clandestine removal.
10. The appeal was partly allowed, restricting the excise duty demand to the actual shortage of finished products and setting aside the penalty.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the Tribunal's assessment of the evidence and legal precedents, and the final decision on the excise duty demand and penalty for the shortage of finished products during stock taking.