2017 (11) TMI 700 - AT - Central Excise

Clandestine removal - shortage of goods - M.S. Ingots - method of stock-taking - Held that - for fair adjudication of the case, and to ascertain how the stock taking was done, the cross examination of the punch witnesses was required. Moreover, as per the show cause notice as stated by the Ld. Counsel for the appellants that 10 PCS of each size has been weighted and on the basis of that, the average weight has been drawn. This fact is to be ascertained from the panch witnesses whether the stock taking was done physically or on eye estimation basis - Denial of cross-examination of panch witnesses is a gross violation of principle of natural justice - appeal allowed by way of remand.

Summary

Issues:
Appeal against confirmed duty demand, interest, and penalties.

Analysis:
1. The case involved allegations of clandestine clearance of finish goods without duty payment based on stock shortages during a factory visit. The appellants were accused of clearing M.S. Ingots and runner risers without payment of duty.
2. Discrepancies in raw material stock, specifically sponge iron, Silico Manganese, and Ferro Silicon, were also noted, leading to allegations of availing Cenvat Credit on missing raw materials.
3. The appellant argued that physical verification was not conducted, and stock verification was based on eye estimation, citing legal precedents requiring proper physical verification. They contended that the shortages found were insignificant and did not warrant duty demand.
4. The appellant further defended against the allegations by claiming that the stock of sponge iron was later found to tally with the stock register, implying no clandestine removal. They relied on legal decisions to support their stance.
5. The adjudicating authority's denial of cross-examination of punch witnesses was deemed a violation of natural justice, as it hindered fair adjudication and clarification on the stock-taking process.
6. The appellate tribunal set aside the impugned order and remanded the matter back to the adjudicating authority. They directed the authority to allow cross-examination of punch witnesses and to adjudicate the case on its merits, ensuring all issues remain open for examination.

This comprehensive analysis covers the issues involved in the legal judgment, detailing the allegations, defenses, procedural irregularities, and the tribunal's decision to remand the case for fair adjudication.