Excise record discrepancies and job-work transfers were treated as explained stock movements, not proof of clandestine removal.

Duty demand and penalties were unsustainable where tin plates were sent to a job-worker under excise challans permitted by the Central Excise Rules and the movement was reflected in statutory records. The alleged mismatch in RG-23A Part I was treated as a procedural lapse, not evidence of clandestine removal or non-accountal. The explanation for excess and unentered finished goods was accepted as consistent with normal production accounting at the end of the day or the next day. As the discrepancies were satisfactorily explained and not refuted, the demand could not be maintained.

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Issues: Whether the duty demand and penalties were sustainable where the inputs were sent to another unit for processing under excise challans and the alleged shortages and excesses were explained as accounted stock movement and production records.

Analysis: The material showed that the tin plates were dispatched to a job-worker unit under challans permitted by the Central Excise Rules and were reflected in the statutory records. The alleged discrepancy in RG-23A Part I was treated as a procedural lapse and not as proof of clandestine removal or non-accountal. The explanation regarding excess and unentered finished goods was also accepted as consistent with the normal practice of accounting for production at the end of the day or on the next day. Since the explanations were not refuted and the discrepancies were adequately explained, the demand could not be sustained.

Conclusion: The duty demand and penalties were not justified and the appeal succeeded.

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