Stock shortage cannot justify excise duty demand without proof of clandestine removal and actual clearance

Duty demand and penalty based on alleged stock shortage under Rule 223A of the Central Excise Rules, 1944 were held unsustainable where the discrepancy arose from annual stock verification and estimation-based accounting, not from proof of clandestine removal. The Tribunal followed its earlier decisions in the assessee's own case and similar matters, which had rejected demands founded only on estimated stock differences. In the absence of material showing actual clandestine clearance, the confirmation of duty could not be upheld, and the demand with penalty was set aside in favour of the assessee.

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Issues: Whether the demand of duty and penalty raised on alleged stock shortage under Rule 223A of the Central Excise Rules, 1944 could be sustained.

Analysis: The appeal concerned shortages noticed during annual stock taking. The Tribunal noted that the issue was already covered by its earlier decisions in the assessee's own case and in similar matters, where demands based on estimated stock differences were found unsustainable. The discrepancy was treated as arising from estimation-based accounting and stock verification, and not as proof of clandestine removal. In the absence of material showing actual clandestine clearance, the confirmation of duty could not be upheld.

Conclusion: The demand of duty and the penalty were not sustainable. The order confirming them was set aside and the appeal was allowed in favour of the assessee.

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