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TMI Blog2008 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... arched. In this godown, 144 bales of cotton and man-made fabrics were found which were cleared without discharging appropriate Central Excise duty as confirmed by Shri Rajiv P. Shah, General Manager of the respondents. These 144 nos. of bales and three loose bundles of textile fabric lying in godown valued at Rs.10,97.365/- were seized under panchanama dated 26-2-1993. Cotton and man-made fabric lying in various departments which was found in excess as compared to statutory records vaiued at Rs. 95,03,233/- was also seized. Further scrutiny of the RG-1 register revealed that various entries were subsequently inserted by pencil showing substantial quantity of fabrics cleared as grey return which as per say of the department were in fact clearance of fabrics duly processed by the respondents and cleared in the garb of grey return. Based on these investigations, Central Excise duty amounting to Rs. 62,17,359.60 was demanded in respect of difference between the stock reflected in EB-4 (Amended) as compared to the physical stock lying in both BSR and outside it. Rs. 83,93,713.79 in respect of difference between closing balance of stock as per calculation with reference to Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EB-4 (Amended) register 2096 bales should have been in stock which were found short and accordingly duty has been demanded on the shortages on the basis of stock shown in EB-4 (Amended) as compared to the physical stock. However, ld. Advocate for the respondents took us through the Ex.-17 returns which is a statement showing result of stock taking conducted annually and shows the opening balance, receipt, issues and closing balance duly verified by the Central Excise officers, to show that the figures regarding production and clearance as shown in Annexure-A to show cause notice were inaccurate and if the correct figures are taken there is no shortage at all. In respect of EB-4 (Amended) we are satisfied with the explanation of the respondents that the revenue has only picked up the bales which were not circled (bale numbers are circled once the same is cleared) and not accepted their contention that there was a mistake in not circling the bale numbers even though the bale has been cleared on payment of duty. This was incorrect method as shortages can be determined only with respect to the physical stock found in the BSR as compared to the closing balance shown in the EB-4 abstract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers and are therefore not something which was subsequently concocted as such challans were already in possession of the department. The statement of the officers which have been retracted cannot be taken cognizance of as oral testimony has to be eschewed in preference to documentary evidence. The revenue has contested the same on the ground that the challans for return grey fabrics do not appear to have been seized but the ld. DR fairly admitted that he has no evidence to substantiate whether these challans were seized or not. Their other plea is that as per the entries in RG-1 Register the sum total of grey return come to 51,44,791.16 L Mts. of cotton and man-made fabrics put together whereas the challans produced by the respondents account for 59,13,635.65 L Mts. of cotton fabrics and man-made fabrics and are thus in excess of about 7,68,849.79 L Mts. which shows that both RG-1 Register figures and grey return challans have been manipulated to cover up the processed fabrics cleared with out payment of duty. It was also submitted that RT 12 returns are prepared on the basis of entries in RG-1 Register whereas in the present case the figures in the RT 12 do not match with the RG- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be doubted at this stage. Once a documentary evidence is available, the oral testimony of the two officers relied upon by the department cannot be taken into account and the decision cited by the revenue in its appeal are not relevant as in those cases such documentary evidence was not available. In view of this we uphold that the pencil entries relating to grey return challans have to be accepted genuine in the absence of any corroborative evidence and the demand pertaining to the same has been correctly dropped by the Commissioner. (iii) Demand of Rs. 83,96,713.79 on account of difference between closing balance of stock as per calculations with reference to Central Excise statutory records RG 1 Register to physical stock as on 26-2-98: 5.1 This demand is divided into two parts. Rs. 51,63,832.35 relating to cotton fabrics and Rs. 32,32,881.44 relating to man-made fabrics. 5.2 As regard's cotton fabrics, we find that a total shortage of 7.37,611.83 L. Mts. has been alleged in the show cause notice and the calculation of the same is given in the Annexure-G to the show cause notice. It is however seen that while alleging the shortage, the revenue has taken into account return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the merchant manufacturer, the fabrics is measured and shortage/excess are duly intimated to the suppliers. In such as case, the shrinkages should have been established by reference to the quantity returned after processing as per the invoice and challans and in the absence of the same no allowance for the shrinkages can be permitted in view of the same, duty is required to be paid on this shortage and Commissioners order is modified to this extent. The matter needs a remand to Commissioner for the purpose of quantifying duty amount on this shortage. (iv) Demand of duty amounting to Rs. 3,08,736/- in respect of 144 bales seized from the godown 6.1 The respondents have taken a plea that these were processed goods which were returned by the buyers due to some defects and were initially cleared on payment of duty. Respondents were however able to produce evidence in respect of 40 bales out of 144 bales only and were unable to produce the evidence for the balance. Since it has been admitted by the appellant's officers who were interrogated at that time that these bales were cleared without payment of duty and since there is no documentary evidence to establish that these were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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