2018 (3) TMI 920 - AT - Central Excise

Clandestine removal - shortage of finished goods - Held that - actual weighment of finished goods was not carried out by the officers and shortage was estimated on the basis of approximation. On the basis of such approximation charges of shortage of finished goods cannot be leveled - The burden was on Revenue to prove that there was shortage in the finished goods. Further there was also burden on Revenue to prove that the alleged goods were manufactured and cleared without payment of duty by conducting appropriate investigation. No such investigation was carried out - appeal allowed - decided in favor of appellant.

Summary

Issues: Estimation of shortage of finished goods without actual weighment, Burden of proof on Revenue to establish shortage and duty evasion

In this case, the appellant, a manufacturer of M.S. Bars, appealed against the Order-in-Appeal demanding Central Excise duty of ?15 lakhs for a shortage of finished goods estimated without actual weighment. The Central Excise officers approximated the shortage based on a proposed method by the appellant, but no actual weighment was conducted. The appellant contested the estimation method, citing the lack of actual weighment and referring to the Panchnama dated 30/11/2012. The Commissioner (Appeals) upheld the duty recovery, disregarding the appellant's contentions. The Tribunal noted that the burden of proof lay with the Revenue to establish the shortage and duty evasion through appropriate investigation, which was not conducted. Therefore, the Tribunal set aside the Order-in-Appeal, allowing the appeal and granting the appellant consequential relief as per law.

This judgment highlights the importance of actual weighment in estimating shortages of finished goods for duty assessment. It emphasizes that charges of shortage cannot be based solely on approximation without proper investigation. The decision underscores the burden on the Revenue to prove both the existence of shortage and any duty evasion, necessitating appropriate investigations to support such claims. The Tribunal's ruling serves as a reminder of the fundamental principles of burden of proof and evidence in excise duty cases, ensuring fairness and accuracy in duty assessments.