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Stock taking method not indicated in Panchnama, renders show cause notice unsustainable. Orders set aside, appeals allowed The Tribunal found that the method of stock taking was not clearly indicated in the Panchnama, rendering the show cause notice unsustainable. ...
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Stock taking method not indicated in Panchnama, renders show cause notice unsustainable. Orders set aside, appeals allowed
The Tribunal found that the method of stock taking was not clearly indicated in the Panchnama, rendering the show cause notice unsustainable. Consequently, the impugned Order-in-Appeal and the Order-in-Original were set aside, and both appeals were allowed in favor of the appellant, who was entitled to consequential relief.
Issues: - Validity of stock taking method - Imposition of penalty under Central Excise Rule, 2002
Validity of stock taking method: The case involved two appeals arising from a common impugned Order-in-Appeal passed by the Commissioner (Appeals), Central Excise Meerut-II at Noida. The officers of Central Excise visited the manufacturing premises of the appellant and conducted an inspection, resulting in a Panchnama indicating a shortage of 106 MT of Billets during stock taking on 28.02.2013. A show cause notice was issued demanding Cenvat Credit and proposing a personal penalty. The Order-in-Original confirmed the demand and imposed penalties, which were challenged in the appeals. The appellant argued that the stock taking was carried out by eye estimation and was not sustainable. However, the Commissioner (Appeals) upheld the original order. Upon review, the Tribunal found that the method of stock taking was not clearly indicated in the Panchnama, leading to the conclusion that the show cause notice was not sustainable. Consequently, the impugned Order-in-Appeal and the Order-in-Original did not survive in law, and both appeals were allowed with the appellant entitled to consequential relief.
Imposition of penalty under Central Excise Rule, 2002: The appellant contended that the stock taking was not conducted but was based on eye estimation, with no clear indication of the method used in the Panchnama. The Managing Director, as per the show cause notice, expressed satisfaction with the stock taking method. However, upon considering the arguments and reviewing the Panchnama, the Tribunal found that the method of stock taking was not specified, leading to the conclusion that the show cause notice was unsustainable. As a result, the impugned Order-in-Appeal and the Order-in-Original were set aside, and the appeals were allowed in favor of the appellant, who was entitled to consequential relief as per law.
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