2018 (6) TMI 7 - AT - Central Excise

Clandestine removal - excesses of stock - confiscation orders - correctness of stock verification process, which was arrived on the basis of average weight of one of the products - Held that - Admittedly there are no inventories produced by the Revenue. It is not only difficult but impossible to weigh such huge stock, without reflecting the same in the inventory - It has been held in number of Tribunal decision that the stock position having been arrived on the basis of average weight of one of the products and in the absence of inventories, cannot be held to be reflecting the correct stock position. A mere non accountal of goods in RG register would not invite confiscation of the same or imposition of penalty, in the absence of any evidence to show that the goods were meant for clandestine removal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Excess stock found during verification leading to duty implication.
2. Confiscation of seized goods and imposition of penalties.
3. Dispute regarding stock taking method and absence of inventories.
4. Lack of evidence for clandestine removal of goods.

Analysis:

Issue 1: The appellant, engaged in manufacturing S.S. Billets and S.S. Flats, faced duty implications due to excess stock found during a verification visit by officers. The excess stock was suspected to be for clandestine removal, leading to seizure.

Issue 2: Proceedings were initiated resulting in the confiscation of seized goods with an option for redemption on payment of a fine. Additionally, penalties were imposed on the appellant and the Manager (Excise). The appellant challenged this order, leading to the present appeal.

Issue 3: The appellant contested the method of stock taking, arguing that the absence of inventories and the explanation for non-entry of some goods reflected their bonafide. The appellant claimed that the stock position was based on average weight and lacked evidence of intent for clandestine removal.

Issue 4: The Revenue contended that the excess stock not being recorded indicated a clandestine motive. However, the Tribunal found the absence of inventories problematic, citing previous decisions where stock positions based on average weight without inventories were deemed inaccurate. The Tribunal also noted that mere non-accountal of goods in the register does not warrant confiscation or penalties without evidence of clandestine intent.

In conclusion, the Tribunal set aside the impugned order, allowing both appeals in favor of the appellants due to the lack of evidence supporting the suspicion of clandestine removal and the inaccuracies in the stock position determination based on average weight without inventories.