Excise stock variation must be proved by actual weighment, not visual assessment or unsupported estimates

Stock variation-based excise action cannot rest on visual assessment alone when goods are lying in loose and bale form. Where excess and shortage are worked out without actual weighment, and only by counting bales and bags with an average weight calculation, the verification is unreliable. A company representative's statement, unsupported by independent and cogent evidence, is not enough to sustain duty demand or penal consequences. On this basis, confiscation, redemption fine and penalty were held unsustainable, and the assessee obtained consequential relief.

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Issues: Whether demand, confiscation, redemption fine and penalty could be sustained when excess and shortage of stock were determined only by visual examination without actual weighment of goods lying in loose and bale form.

Analysis: The stock verification was not based on actual weighment of the goods. The quantities of excess and shortage were arrived at only by visual assessment and by counting bales and bags with an average weight calculation. The statement of the company representative was not supported by independent and cogent evidence. In such circumstances, the basis for alleging excess or short stock was found unreliable, and penal consequences under the excise rules could not rest on such a method of verification.

Conclusion: The demand, confiscation and penalty were not sustainable and the assessee succeeded on this issue.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief as permissible in law.

Ratio Decidendi: Penal action and duty demand based on stock variation cannot be sustained unless the shortage or excess is established by reliable actual weighment or comparable cogent evidence.

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