2017 (3) TMI 221 - AT - Central Excise

Appeal outcome: Stock shortage, duty demand, penalties examined. Discrepancies in verification accuracy noted.

The Tribunal rejected the appeal filed by appellant no.1 and allowed the appeal filed by appellant no.2, disposing of both appeals based on findings ... Clandestine removal - shortage of stock - Held that: - eye estimation cannot be said to be 100% accurate, but it is also observed that in the present case, the difference in the stock was substantially large and cannot be ignored. The shortage between the physical and the RG-1 stock is 67.59% in respect of Pig Iron. In the case of Pig Iron chips, it is 28.18% - the director of appellant company have deposited the amount of ₹ 6,00,000/-. Penalty on Managing Director of the appellant company - Held that: - The finding of the Commissioner (Appeals) is merely on assumptions and presumptions - No penalty could be imposed on Managing Director. Appeal disposed off - decided partly in favor of appellants. Issues:1. Alleged clandestine clearance of goods without payment of duty.2. Shortage of stock detected during search.3. Adjudication of demand of duty, education cess, interest, and penalty.4. Appeal filed by both the Revenue and the appellants.5. Stock verification procedure and accuracy of stock measurement.6. Imposition of penalty on the appellant no.2.Analysis:Issue 1: Alleged Clandestine ClearanceThe case involved M/s. Narsingh Ispat Ltd., accused of clandestinely clearing goods without duty payment. A show cause notice was issued, leading to confirmation of duty demand, education cess, interest, and penalties by the Adjudicating Authority. Both parties filed appeals before the Commissioner (Appeals), who confirmed the duty demand and imposed penalties, leading to further appeals by the appellants.Issue 2: Stock ShortageDuring a search, a significant shortage of Pig Iron and Pig Iron chips was detected against the RG-1 stock of the company. The Adjudicating Authority confirmed the shortage, leading to the demand for duty payment and penalties. The Commissioner (Appeals) upheld the shortage findings, resulting in the appeals filed by both parties.Issue 3: Adjudication and PenaltiesThe Adjudicating Authority confirmed duty demand, education cess, and penalties against the appellants. The Commissioner (Appeals) also upheld the duty demand, imposed penalties, and confirmed the shortage findings, leading to further appeals by both parties.Issue 4: Appeal ProceedingsBoth the Revenue and the appellants filed appeals before the Commissioner (Appeals) challenging the duty demand, penalties, and shortage findings. The Commissioner's order led to subsequent appeals by the appellants, seeking relief from the imposed penalties and duty demands.Issue 5: Stock Verification AccuracyThe accuracy of the stock verification procedure and the measurement of stock quantity were contested by the appellant. The Adjudicating Authority and the Commissioner (Appeals) considered the stock verification reports and explanations provided by the appellant regarding the shortage of goods, leading to conflicting interpretations of the stock verification process.Issue 6: Penalty ImpositionThe imposition of penalties on the appellant no.2, the Managing Director, was a subject of dispute. The Commissioner (Appeals) observed the necessity of penalty imposition based on the involvement of appellant no.2, while the Tribunal found no concrete evidence of appellant no.2's direct involvement, leading to the allowance of the appeal filed by appellant no.2.In conclusion, the Tribunal rejected the appeal filed by appellant no.1 and allowed the appeal filed by appellant no.2, disposing of both appeals based on the findings related to stock shortage, duty demand, penalties, and the involvement of appellant no.2.