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TMI Blog2024 (11) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl. No. Goods Book Stock (in M.T.) Physical Stock (in M.T.) Shortage in Stock (in M.T.) 1 TMT Bars 2206.385 2073 133.385 2 M.S. Billets 6673.720 141.700 6532.020 3 Sponge Iron 11655.920 NIL 11655.920 4 Pig Iron 58.845 15.500 43.345 2. A Panchnama was drawn and physical stock of the goods was verified in the presence of two witnesses and the Shri Munnoo Prasad Jaiswal, the authorized signatory of the respondent. TMT bars of different sizes viz. 8mm, 10mm, 12mm and 16mm were found in the stock. Sample weight of a bundle of each size of TMT bar was taken and the same was multiplied with the number of bundles available of that size, to ascertain the total quantity. 2.1. Similarly, physical stock of M.S. Billets were ascertained as 39.200 M.T. The authorized signatory of the respondent informed that 102.500 M.T. of M.S. Billets were loaded in the re-heating furnace, which was accepted by the Officers as it was not possible to be physically verified. Thus, the physical stock of M.S. Billets was ascertained as 141.700 M.T. 3. During the course of follow-up action on 01.12.2010, the Officers visited the respondent's office situated at 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it was concluded that no case is sustainable against the respondent. Therefore, whole of the charges levelled against the respondent in the Show Cause Notice were dropped by the ld. adjudicating authority vide the impugned order. Consequently, demand of duty and denial of CENVAT Credit were also set aside. 8. Against the said order, the Revenue is before us. 9. The Ld. Authorized Representative of the Revenue submits that the respondent, since initiation of the investigation, has only tried to hide their incriminating activities by citing the shortcomings of the Departmental officers and have tried to divert the entire attention towards the allegedly procedural lapses during the investigation. It is also submitted that the respondent has only emphasized on stock verification of TMT Bars, M.S. Billets and Pig iron, which, according to them, was done on estimation basis and no actual weighment was done. 9.1. It was also submitted by the Ld. Authorized Representative of the Revenue that it apparently becomes evident that the respondent did not aid or extend their assistance towards the Departmental Officers during the investigation; it requires hardly any mention that the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . adjudicating authority, on the other hand, directed scrutiny of ST- 3 Returns for the period from November, 2010 to April, 2011 on 02.09.2014 after almost 4 years of investigation for clandestine removal which possibly could never reveal the true picture; the jurisdictional Range Office provided a scrutiny report on ER-1 returns for the period from November, 2010 to April, 2011 on 08.09.2014, wherein no irregularities were found. 9.6. It is also contended that the ld. adjudicating authority never realised the actual allegation against the assessee. He never contemplated the fact that the respondent had maintained their records immaculately and reflected the same in their periodical returns; what he should have perceived instead is that the returns would not throw light on the actual physical stock lying in the factory premises. He submits that the unlawful activity of clandestine removal had already been performed well before the submission of periodical returns while maintaining their books of records flawlessly; therefore, it is also evident that the assessee had manipulated production records as well in order to manipulate the records of raw materials. 9.7. It is his further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alleged shortage, done by assuming the average weight of the goods and no actual weighment of stock being done, cannot be accepted to hold clandestine removal of the goods. 10.3. The Ld. Counsel for the respondent also submits that the investigating team did not conduct a complete visit of the factory premises of the respondent; in fact, the pig iron found short was stored in the oxygen plant side, but no visit was done by the investigating team of the same to ascertain the shortage of pig iron. He further submitted that the respondent were filing their E.R.-1 Returns regularly and showing their clearances on payment of duty; the pig iron alleged to be found short was used by the respondent in the manufacturing of their final product which was cleared on payment of duty. He submits that the investigating team has investigated the matter, along with the suppliers of the raw material and the person who has bought the finished goods from the respondent, but nowhere any discrepancy was found, which has been recorded in the Show Cause Notice itself. In these circumstances, he contends that the ld. adjudicating authority has rightly dropped the charges against the respondent. 10.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional Range Officer, who had also not found any discrepancy in the activity of the respondent. 12.2. Moreover, it has been alleged that the respondent has manufactured the final product and cleared the same clandestinely, but while doing so, the Revenue on the one side alleges that there was a shortage of raw material and on the other side, alleges clandestine clearance of finished goods, all the while without bringing any evidence on record to show as to from where the respondent procured raw materials to manufacture the goods which were alleged to have been cleared clandestinely. The investigating team has not alleged any excess consumption of electricity, shown as to how the goods were transported or as to how much labour was employed. 13. In these circumstances, we observe that the ld. adjudicating authority has observed as under: - "4.01 As regards the first issue, the notice alleges on the basis of stock verification report dated 30.11.2010 that there were shortages in the stock of finished goods and the raw materials which were allegedly surreptitiously removed by the noticee no.-1 from their factory without payment of Central Excise duty. The said allegation has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory premises, but nothing is mentioned in the notice about any discrepancy in such resumed documents. The statement of Shri Munnoo Prasad Jaiswal, the authorized signatory of the said assessee, was also recorded on the spot but as per notice he could not explain any reason of such shortages. Thereafter, on 01.12.2010, the officers visited the office premises of the noticee no.-1 situated at 207, Ashiana Towers, Exhibition Road, Patna and resumed certain documents from that place but once again nothing is mentioned in the notice about any discrepancy noticed in such resumed documents from the office. Thereafter, the statement of Shri Manish Poddar was recorded on 15.06.2011 but it is surprising that his statement has not been relied upon in the notice for framing charges against the noticee no.1. From the statement of Shri Sanjiv Kumar Chaudhary, the noticee no.-2, recorded on 24.01.2011, no concrete and tangible evidence emerged about the allegation of clandestine removal of finished goods and the raw materials. The follow up action at the end of raw material suppliers was also made but no discrepancy in respect of purchase of raw materials was noticed. On the contrary, the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India, Commercial Branch, Patliputra, Patna during the period 2010-11. On scrutiny of Electricity bills vis-à-vis corresponding production of M. S. Bars/Billets, it is found that the ratio of consumption of electricity was almost in the normal range of around 1100 units for M. S. Billets and 225 units of M. S. Bars/Rods. Further, the figure of consumption of raw materials and production and Sale of finished goods shown in the ER-1 returns for the period 2010-11, precisely match with the figure shown in the corresponding Balance Sheet and Profit & Loss account for the said period. The figures of sale of finished goods as shown in the ER-1 returns for 2010-11 match with the figure shown in the Sales Tax return for the same period. The closing balance of raw materials and finished goods as shown in the ER-1 returns for 2010-11 match with the figure shown in the stock statements submitted on monthly basis, with their bankers as named above. Hence there remains no reason to disbelieve the figure shown to Central Excise authorities and it also transpires that impugned goods were in existence. 4.04 In a plethora of decisions, various judicial forums have held that the charges o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliable evidence, I am of the view that the Department could not prove its case beyond reasonable doubt and the demand has been made on presumptions and assumptions. 4.06 In this regard, I find that the Hon'ble Tribunal in the case of M/s. Rawalsia Ispat Udyog Ltd v. CCE, Delhi as reported in 2005 (186) E.L.T. 465 (Tri.-Del), after taking note of Hon'ble Supreme Court's judgment in the case of M/s. Oudh Sugar Mills Ltd. v. UOI as reported in 1978 (2) E.LT. (J 172) (S.C.) held that the findings based on such presumptions and assumptions without any tangible evidence will be vitiated by an error of law in the absence of any other reliable and concrete substantive evidence." 13.1. We do agree with the observations made by the ld. adjudicating authority in the impugned order. It is also seen that no tangible evidence in support of the allegation of shortage of raw material for clearance of the finished goods has been brought on record by the Revenue, other than the statement recorded during the investigation of Shri Munnoo Prasad Jaiswal, the authorized signatory of the respondent. 14. In these circumstances, we hold that the charge of clandestine removal of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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