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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 ..... various stages, shortages were noticed in the physical stock lying in the premises as compared to the stock that should have been in balance as per the RG-1 register in respect of the entire fabric and also in the packed fabrics as compared to the stock reflected in EB-4 (Amended) and physical stock lying in the bonded store room and as well as outside the bonded store room. The godown adjacent to the premises of the respondents was also searched. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. As regards shortage as compared to stock reflected in EB-4 (Amended) register, the revenue pointed out several discrepancies in the maintenance of the register, in as much as after considering the opening stock as on 1-4-93, production during the period 1-4-93 to 26-2-98 and clearance during the period 1-4-93 to 26-2-98, the closing balance should have been 1327 bales as shown in EB-4 abstract and that as per 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the RT 12 returns in which the fact of return of grey fabrics and the exact quantity of return etc. was mentioned and the RT 12 which was duly assessed by the officers without raising any query. The same is also supported by the grey return delivery challans under which the fabrics were returned to the persons who have sent their grey fabrics for processing. It is the respondent's contention that these returns were also seized by the officers 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave attempted to obtain further corroborative evidence which was available with them in the form of return grey challans duly seized from their factory premises and enquiries could have been conducted from supplier to whom the fabrics were returned. Besides an important register like lot register has not been examined at all to verify the correctness of the stand taken by the respondents. In view of this the authenticity of the challans cannot 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elongation only which takes place. We have also noticed that the respondents have been claiming elongation etc. in their RG-1 Register in respect of the cotton fabrics but no adjustments appear to have been sought in respect of man-made fabrics. Once elongation and shortages are being claimed in RG-1 Register/RT 12 returns, shrinkages cannot be considered over and above that. Besides, the respondents have admitted, that while returning the fabric after processing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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