Stock verification discrepancies and admitted shortages sustained a clandestine removal finding, with duty and penalty upheld.

Stock verification by excise officers was treated as distinct from a search, and the absence of panch witnesses was held not to invalidate the exercise because they were only an additional precaution. The factory manager was present and certified the figures, and the director later admitted the shortages in his statement. A belated objection to the verification procedure, raised only in reply, did not displace the recorded discrepancies. In the absence of any plausible explanation or credible rebuttal, the finding of clandestine removal was upheld and duty demand with penalty was sustained against the assessee.

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Issues: Whether duty and penalty were sustainable on shortages noticed during stock verification, and whether the assessee could displace the finding by challenging the stock verification procedure and seeking cross-examination of panch witnesses.

Analysis: Stock verification by the excise officers was treated as distinct from a search, and the presence of panch witnesses was held to be only an additional precaution rather than a legal necessity. The factory Manager was present during the verification and certified the figures, and the Director later ed the shortages in his statement. The objection that the stock verification was defective was raised only at the reply stage and was treated as belated. In the absence of any plausible explanation for the shortages, and with no credible rebuttal to the verified discrepancies, the finding of clandestine removal was upheld.

Conclusion: The challenge to the stock verification failed, and the demand of duty together with penalty was sustained against the assessee.

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