2010 (11) TMI 171

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....cts on record, the respondent is engaged in the manufacture of Black Steel Pipes and Tubes. Their factory was visited by the Central Excise officers on 4-7-2007 who conducted various checks and verifications. As a result, their final product to the tune of 51.850 MT involving duty of Rs. 2,76,000/- was found short. Such shortages were admitted by the factory Manager Shri Chandra Shekhar Singh. The duty was also deposited by the respondent on 6-7-2007. 3. On the above basis, show cause notice was issued on 6-11-2007 alleging that the shortages in the final product are on account of clandestine removal of the same. Accordingly, notice proposed confirmation of demand and imposition of penalty. The said show cause notice was adjudicated....

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....would like to mention that the method of stock taking adopted by the officers at best can lead to suspicion of excess stock but cannot be a substitute for the proof of shortage unless the Revenue is in a position to clearly demonstrate the fact of shortage in stock through physical weighment of entire stock, the allegation of shortage in stock cannot be sustained. In this connection, I find that Hon'ble CESTAT in following cases have observed that goods found in excess on the basis of eye estimation and not on the basis of physical weighment is not sustainable under law                 Agra Steel Corporation v. CCE - 2001 (132) E.L.T. 659    &nbs....

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....rification can be said to be based on presumption and assumption. The Hon'ble Tribunal in the case of Pack Point v. CCE, Jaipur reported in 2006 (195) E.L.T. 327 has held "it is seen from the show notice that the demand for shortage of finished goods was arrived at based upon the presumption and assumption and the shortage of inputs was also linked to the shortage of finished goods. It is also further seen that the department has not adduced any evidence in respect of clandestine removal of inputs. Mere assertion by the authorities that shortage of inputs tantamounts to clandestine removal is not enough. A clandestine removal has to be proved and should be proved beyond doubt. Further, in the case of Icycold Commercial Enterprises v. CCE, C....