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TMI Blog2009 (3) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... s further visited the factory premises on 9-9-86 for detailed investigation. 2.3 During visit on 9-9-86, the officers carried out physical verification of the stock of finished excisable goods lying in the factory premises and also verification of the records maintained by them under regular panchnama dated 9-9-86. On verification of stock of finished excisable goods, the officers found shortages in respect of three products viz. Insan-LE, Iso-Octanol and Iso-Decanol and also found excess quantity of Insan-LE (2,70,460 Kgs - 38637 Ltrs.) and Insan-HE (3106 Kgs). Accordingly, the physical balance of Insan- LE weighing 22.20.500 Kgs. - 3172142 Ltrs.) and Insan HE weighing 3106 Kgs found in excess as on 9-9-86, were placed under seizure under reasonable belief that said goods are offending goods liable for seizure. The seized goods were handed over to the assessee under a regular supratnama dated 9-9-86. The initial order passed on 31-1-91 after issue of show cause notice on appeal was remanded by the Tribunal vide Order No. 187/1994-CE dated 13-7-94 to determine the exact classification of the product. Once again the appellants challenged the order passed by the Commissioner on 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore find that the Commissioner was correct in not adjusting the shortages against the excess found. However, in respect of the shortage of 50748 kg., the Commissioner should have considered whether the loss was on account of evaporation etc and condonable within the limit of 1% and same should not be rejected merely on the ground that proper procedure for claiming condonation was not followed when a special directions to that effect was given by the Tribunal. This observation equally applies to other shortage in respect of Insan-LE and Iso-Octanol. 12. So far as the shortages in Insan-HE is concerned the appellants have taken a plea that quantity consumed is fuel which was used within the factory of production and so was not shown in the RG-1 register and has produced records to substantiate their claim which has not been considered by the Commissioner. 13. We do find that the submission to that effect has been made by the Appellant vide their letter dated 26-3-2000 after the personal hearing and same has not been commented upon by the Commissioner. Further, these efficiency and utility reports relating to production and consumption were seized by the department and were in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod under consideration. Further, he submits that the demand of Rs. 22,174/- on Insan-LE on the ground that the same was found illicitly manufactured and cleared is contrary to the findings of the Tribunal wherein it was held that extended period cannot be invoked. He drew my attention to para 14 wherein the Tribunal has observed that in spite of excess production found and seized by the department the Revenue has not been able to detect a single instance of removal to establish clandestine removal on the part of the assessee. He submits that in view of this position, duty could not have been demanded on the Insan-LE found short. He also submitted that the differential duty demand of Rs. 1,83,247.48 in respect of Insan-LE cleared by them is against the remand order of the Tribunal since it relates to the period prior to six months from the date of show cause notice. He also submits that no penalty could have been imposed under Rule 173Q of Central Excise Rules, 1944. On the other hand, learned D.R., submits that the condonable loss has been correctly calculated by the Commissioner. He also submits that duty demand of Rs. 22,174/- was on the actual shortage found during the visit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, clearance and closing balance have been added by the appellants which again is not the correct procedure. The evaporation loss, loss has to be considered after taking into account the opening balance and the production figures only. By adding production and clearance, the actual quantity gets almost doubled whereas whatever has been produced has to be cleared and once it is cleared there is no operational loss. Therefore the proper method is to take the opening balance and the production, calculate the condonable loss and thereafter calculate the actual shortage or excess as the case may be. Since the procedures adopted by both the Revenue as well as the appellants is incorrect, this issue has to be remanded to the Commissioner for a fresh decision. 7. Even though the learned advocate, argued that the shortage of 45,898 Kgs found by the Revenue resulted in duty demand of Rs. 22,174/- cannot be confirmed in view of the remand order of the Tribunal directing the Commissioner not to invoke extended period, I find that there is no observation in the order of the Tribunal. The Tribunal had held that in respect of shortage found based on efficiency/utilities report, extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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