Stock shortage relief in iron and steel items upheld where shortages fell within condonable limits and no clandestine removal was alleged

Stock shortages in iron and steel items were held to fall within the condonable limits prescribed by the applicable CBEC circular, and no allegation of clandestine removal was made. On those facts, duty demand based on the shortages could not be sustained, and the Tribunal's relief to the assessee was upheld. The Court also noted that similar matters had been decided consistently in favour of the assessee and that the long delay in adjudication was an additional circumstance showing the proceedings had become stale.

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Issues: Whether the assessee was entitled to relief in respect of stock shortages in iron and steel items in the light of the CBEC circular and the surrounding factual findings.

Analysis: The stock reconciliation filed by the assessee was accepted and the percentage of shortage was found to be within the condonable limits prescribed in Circular No. 52/79-CX-6 dated 26.10.1979 for iron and steel items. There was no allegation of clandestine removal. The Court also noted that similar disputes involving comparable facts had been decided in favour of the assessee and that the departmental authorities were bound to maintain a consistent approach. The long delay in adjudication was an additional circumstance showing that the proceedings had become stale.

Conclusion: The issue was decided in favour of the assessee; the Tribunal's order allowing relief was upheld.

Ratio Decidendi: Where stock shortages in iron and steel items fall within the condonable limits prescribed by the applicable CBEC circular and there is no allegation of clandestine removal, duty demand based on such shortages cannot be sustained.

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