2015 (3) TMI 866 - HC - Central Excise

High Court affirms Tribunal decision on duty demand under Central Excise Act emphasizing importance of evidence

M/s. Goyal Ispat Ltd. Versus The Custom, Excise and Service Tax Appellate Tribunal, The Commissioner of Central Excise

The High Court upheld the Customs, Excise and Service Tax Appellate Tribunal's decision regarding the non-production of the mahazar witness and the method ... Clandestine removal of goods - non-recording of the lorry being put to use for weighment - Held that:- Tribunal on the statement drawn in the mahazar and other records on which we did not want to dwell further to come to a different conclusion. Nevertheless, before this Court, the appellant while seeking to consider the first question of law, has failed to bring to our attention the plea of the Department in the appeal filed before the Tribunal that non-production of the mahazar witness was not fatal to the case, by producing the memorandum of appeal filed by the Department before the Tribunal. - In the absence of any such material, there is no possibility for this Court to consider this issue at all. The next question is whether stock taking conducted on eye estimation is fatal to the case of the Department. We find that the order of the Tribunal is not on the basis of visual inspection, but based on mahazar records recording the shortage of goods, which has been done in the presence of the independent witnesses and such shortage was supported by the unretracted statement of Mr.Balaji, Manager of the assessee company. In this view of the matter, the non-recording of the correct quantity of goods in the statutory record, viz., RG.1 register maintained by the assessee establishes the case for demand of duty, more so in a case of statement accepting Central Excise violation. - Decided against assessee. Issues:Challenging order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) - Non-production of mahazar witness - Stock taking method using eye estimation.Analysis:1. Non-Production of Mahazar Witness:The case involved a challenge to the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the non-production of a mahazar witness. The Tribunal found that the mahazar recording the shortage was signed by the Manager of the assessee company and the appellant failed to establish any errors in the recording of the shortage during cross-examination. The Tribunal also noted that the absence of mention of the lorry being used for weighment in the mahazar did not impact the validity of the shortage recorded. The Tribunal concluded that the shortage, not reflected in the RG.1 register, justified the duty demand. The High Court upheld the Tribunal's findings, emphasizing that the appellant did not present any evidence to challenge the Tribunal's conclusion on this issue.2. Stock Taking Method - Eye Estimation:The second issue pertained to the method of stock taking using eye estimation. The Commissioner (Appeals) questioned the manner in which the physical stock was taken and doubted the credibility of the process. However, the Tribunal, relying on the unretracted statement of the company's Manager and the mahazar records, upheld the duty demand. The High Court noted that the Tribunal's decision was not based solely on visual inspection but on the mahazar records and the Manager's statement. The failure to accurately record the quantity of goods in the statutory register supported the duty demand, especially in cases involving Central Excise violations. As the issues raised were deemed questions of fact, the High Court affirmed the Tribunal's decision, dismissing the appeal.In conclusion, the High Court upheld the Tribunal's decision regarding the non-production of the mahazar witness and the method of stock taking, emphasizing the importance of accurate record-keeping and supporting evidence in cases involving duty demands under the Central Excise Act.