Negligible stock shortages and unverified godown records led to rejection of duty demand and penalty.

Stock shortages in plastic granules across multiple godowns were found to be insignificant, with each variance being less than 1 MT and forming a negligible part of the overall inventory. The fact that one godown was not verified also affected the reliability of the stock position. On these facts, the discrepancies were treated as too minor to justify duty liability, and benefit of doubt was extended to the appellant. The duty demand and penalty were therefore not sustained, with consequential relief granted.

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Issues: Whether the duty demand and penalty could be sustained on the basis of the shortages noticed in stock verification of plastic granules maintained across multiple godowns.

Analysis: The stock discrepancies were found in respect of a very large quantity of goods, with shortages in each variety being less than 1 MT and forming an insignificant percentage of the overall stock. The appellant's stand that one godown was not verified was also relevant to the correctness of the stock position. In the circumstances, the shortages were treated as negligible and the benefit of doubt was extended to the appellant.

Conclusion: The duty demand and penalty were not sustained, and the appeal was allowed with consequential relief.

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