2009 (7) TMI 978

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..... 7 Kgs of finished goods involving duty of Rs. 1,29,773/- was found short. Further, the officers also noticed shortage of raw materials total valued at Rs. 2,66,345/- involving duty of Rs. 40,297/-. It was also noticed that one of the Fork Lift, on which the appellant had availed the modvat credit, was not available in the factory. Appellants admitted that the said Fork Lift was transferred to their another unit without reversal of credit of Rs. 77,345.49. The statements of the General Manager and Managing Director accepted such shortages of finished products and raw materials. 2. Based on the above, proceedings were initiated against the appellants which culminated in the orders passed by the lower authorities confirming duty of Rs. 1,29, .....

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..... oducts are pseudo and not real, inasmuch as the total shortages are to the tune of 0.3% of their total production. Such shortages is inevitable due to various practical reasons, such as tearing of bags (containing finished goods) at the time of storage, spillage during re-packing or re-bagging, accounting of clerical errors, variance of weighing scales etc. which are normal practical and productions hazards due to which minor weight difference do occur over a period of time. In the absence of any evidence to arrive at the conclusion that the goods have been cleared clandestinely, confirmation of demand was not justified. He explains that General Manager has not accepted the clandestine clearance but has simply accepted the shortages in the .....

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..... shortages of inputs, I find that there is no huge shortage which can be safely contributed to losses during the handing etc. There is virtually no other evidence on record to reflect upon the clandestine clearances of inputs or the final products. It is well settled law that the charges of clandestine removal can not be upheld on the basis of shortage detected and are required to be based upon the positive, tangible and affirmative evidences. There being no such evidences at all on record, I find no justification to uphold the impugned order confirming demand, interest and imposing of penalties on the appellants, on the findings of clandestine removal. Accordingly, except for confirmation of demand of duty Rs. 77,345.49 involved in the For .....

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