Physical verification shortage can sustain duty demand and penalty when quantified from assessee records and contemporaneous acceptance.

Shortage of finished excisable goods found during surprise physical verification sustained duty demand and penalty where the stock difference was quantified using the appellant's own catalogue weights, recorded in the presence of independent witnesses and the appellant's representative, and was not disputed at the time of verification. The managing director also accepted the shortage and debited the duty, so the absence of actual weighment did not discredit the departmental case. Authorities relied on by the appellant concerning duty payment during investigation were distinguished on facts, and the demand and penalty were upheld.

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Issues: Whether duty demand and penalty were sustainable on shortage of finished goods detected during physical verification, despite the absence of actual weighment and the appellant's challenge to the method of quantification.

Analysis: The shortage was found during a surprise visit in the presence of independent witnesses and the appellant's representative. The quantity was worked out by multiplying the number of pipes and tubes by the sectional weight reflected in the appellant's own catalogue. The method of quantification was not disputed at the time of verification, and the managing director accepted the shortage and also debited the duty. In these circumstances, the absence of actual weighment did not dislodge the departmental case. The decisions relied upon by the appellant on deposit of duty during investigation were treated as distinguishable on facts.

Conclusion: The demand of duty and the penalty were upheld, and the appeal failed.

Ratio Decidendi: A shortage of excisable goods found on physical verification can sustain duty demand and penalty where the quantification is supported by contemporaneous verification, the assessee's own records, and an ance of shortage, even if no actual weighment was conducted.

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