2017 (4) TMI 595 - AT - Central Excise

Shortage of stock - appellant case is that the difference in the stock of finished goods is due to wrong method of measurement by the officers - Held that - whatever shortage was found at the time of visit of the officers and the panchnama was drawn for which no dispute was raised by the representative of the company who was present at the time of panchnama, all explanation given subsequently are of no help to the appellant - appeal dismissed - decided against assessee.

Summary

Issues:
1. Shortage of finished goods and semi-finished goods during physical stock verification.
2. Demand of duty raised on shortages.
3. Imposition of penalty under Section 11AC and personal penalty.
4. Appeal challenging the order of the adjudicating authority.
5. Dispute regarding the method of measurement and shrinkage adjustments.
6. Consideration of employee's admission during panchnama.
7. Validity of explanations provided post-panchnama.

Analysis:
The case involved a shortage of finished goods and semi-finished goods during a physical stock verification, leading to a demand for duty on the shortages and the imposition of penalties under Section 11AC and personal penalties. The appellant challenged the order before the Commissioner (Appeals), who upheld the original order but set aside certain penalties. The appellant then appealed to the Tribunal.

The appellant argued that the stock differences were due to incorrect measurement methods by the officers and that shrinkage adjustments were not considered adequately. The appellant claimed that the shrinkage percentage was within an acceptable norm, which should offset the shortage.

The revenue contended that the shortages were confirmed during physical stock taking, as evidenced by the panchnama signed by the appellant's employee. The revenue argued that the appellant's explanations regarding measurement errors and shrinkage were afterthoughts and should not be considered. The revenue maintained that the shrinkage was already factored in during the panchnama and no further adjustments were warranted.

The Tribunal carefully considered both parties' submissions and found that the stock variations were determined during the physical stock taking, with the appellant's employee admitting to the shortages in the panchnama without raising any disputes at that time. The Tribunal noted that the appellant's defenses were presented only after receiving the show-cause notice, and therefore, were not considered valid. The Tribunal upheld the lower authorities' decisions, finding no fault in their observations, and dismissed the appeal.

In conclusion, the Tribunal affirmed the order, emphasizing the importance of timely and consistent responses during stock verifications and panchnamas, and rejected the appellant's post-panchnama explanations as insufficient to challenge the initial findings.