Granite slab shortage and wastage records required fresh verification; DTA clearance and exemption compliance remained relevant to duty liability.

Alleged shortage of polished granite slabs was examined against the assessee's claim that breakages and wastage generated during polishing had been stored elsewhere and were reflected in a separate RG 1 wastage register. The text states that this factual position required fresh verification, so the shortage finding could not stand without de novo inquiry. It also notes that valuation based on comparable goods was left open on remand, while additional duty under Section 3(1) of the Customs Tariff Act was treated as customs duty. Clearance to DTA without Development Commissioner's permission did not by itself remove duty liability, and exemption under Notification No. 2/95 depended on proof of compliance with its conditions.

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Issues: (i) Whether the alleged shortage of 7917.1598 sq. mts. of irregular polished granite slabs represented clandestine removal or breakages/wastage generated in the manufacturing process. (ii) Whether the duty liability, valuation basis and exemption claim required fresh examination, including the effect of clearance to DTA without permission of the Development Commissioner and the applicability of Notification No. 2/95.

Issue (i): Whether the alleged shortage of 7917.1598 sq. mts. of irregular polished granite slabs represented clandestine removal or breakages/wastage generated in the manufacturing process.

Analysis: The shortage was contested on the footing that breakages and wastage arising during polishing were lying elsewhere in the factory and had not been accounted for in the stock verification. The record showed that the separate RG 1 register for wastage was not considered and the existence and accountal of such breakages/wastage were matters capable of verification. In the circumstances, the finding of shortage could not be upheld without a fresh factual inquiry into the wastage records and the actual storage position within the factory.

Conclusion: The issue was remanded for de novo examination and no final finding of clandestine removal was sustained.

Issue (ii): Whether the duty liability, valuation basis and exemption claim required fresh examination, including the effect of clearance to DTA without permission of the Development Commissioner and the applicability of Notification No. 2/95.

Analysis: Since the matter was being remanded on the shortage issue, the valuation adopted by reference to comparable goods was also left open for reconsideration. The additional duty leviable under Section 3(1) of the Customs Tariff Act was treated as customs duty, and clearance to DTA without permission of the Development Commissioner did not by itself negate duty liability. The benefit of Notification No. 2/95 remained dependent on proof of fulfillment of its conditions, which the assessee was permitted to establish in the de novo proceedings.

Conclusion: The valuation and exemption questions were left for fresh adjudication, while the legal position on additional duty and notification compliance was affirmed against the assessee.

Final Conclusion: The appeal resulted in remand for fresh adjudication on the factual aspects of shortage and related valuation, with the assessee permitted to adduce evidence on wastage records and exemption compliance, and with the legal position on duty liability to DTA clearances maintained.

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