TaxTMI 
TaxTMI 
2013 (5) TMI 567
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....has discontinued their manufacturing activity in July, 2002. Their factory was visited by the Central Excise audit team on 11-2-2003. On verification of the records vis-à-vis the stock of the raw material as well as finished goods, the audit team has noticed certain discrepancies. It was found as follows :- Sl. No. Name of the finished product Quantity in M.T. Value per Unit (Rs.) Total Assessable value(Rs.) Rate of duty Total duty (Rs.) 1. M.S. Rod 77.953 13,650.00 10,64,058.40 16% 1,70,249.00 2. M.S. Scrap 43,617 5,400.00 2,35,531.80 16% 37,685.00 Total : 12,99,590.20 2,97,934.00 Sl. No. Name of the inp....
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....ner of Central Excise (Appeals), BBSR-I. The ld. Commissioner (Appeals) confirmed the demand of Rs. 71,745/- with interest under Rule 8(3) of Central Excise Rules, 2002, dropped the demand of Rs. 9,44,003/- and penalty imposed under Section 11AC of the Central Excise Act and personal penalty imposed on the Managing Director Shri A.K. Agarwal. Aggrieved by the said order, the Revenue has filed the present appeal. 4. Ld. A.R. appearing for the Revenue submitted that the ld. Commissioner has not considered the fact that on the date of visit of the officers to the factory, the respondent had failed to show the stock of finished goods as well as raw materials recorded in their statutory Records. Further, on being asked, the Managing Director ....
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.... respondent has submitted that the show cause notice had been issued to them alleging clandestine removal of goods which were found short during the course of visit of the officers to their factory. There is no evidence whatsoever adduced by the department in support of the said allegation of clandestine removal. In absence of positive evidence and circumstantial evidence as held by the ld. Commissioner (Appeals), the charge of clandestine removal cannot be sustained against the respondent. This principle of law has been settled by the Tribunal in various cases. He has referred to the following judgments of the Tribunal :- 1. CCE, Kanpur v. Minakshi Castings - 2011 (274) E.L.T. 180 (All.) 2. CCE, Daman v. Nissan Thermoware Pvt. Ltd. -....
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.... the case. It is not in dispute that during the course of visit of the officers on 11-2-2003, the following shortages were noticed :- "Finished Goods" of (1) M.S. Rod : 77.953 MT (2) M.S. Scrap : 43.617 MT and "inputs" (1) Billet/Ingot : 412.072 MT (2) M.S. Round : 26.420 MT TOTAL : 438.492 MT (3) Furnace Oil : 14.00 KL 7. The visiting audit officers asked the Managing Director of the respondent company Shri A.K. Agarwal to explain the reason for such shortage in physical stock against their statutory stock register and monthly ER-1 return filed for the month of January, 2003. The Man....
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....y way of adducing direct and/or circumstantial evidence, the respondents are not liable to discharge duty even though the shortages of goods and raw materials were found on the date of visit of the officers to their factory and admitted by the Director of the Appellant. On a query from the Bench to explain the reason for the said shortages by way of documentary evidences even on the date of hearing, the ld. Advocate expressed his inability to comply with the same as relevant records are not available with them. We do not see merit in the said submission of the ld. Advocate. It is well settled principle of law that the goods manufactured in a factory are to be accounted for in their statutory production register and inputs are required to be....
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....ve taken place during the closure of the factory, the department had not carried out any further investigation to ascertain the correctness of the said statement. In absence of any contrary evidence we do not find force in the argument of the ld. A.R. that the goods must have been clandestinely removed. The case laws cited by the ld. Advocate in his reply also endorse our aforesaid view. In these circumstances we do not find merit in the submission of the ld. A.R. that the penalty under Section 11AC is invocable against the respondent. However, the respondent is required to pay duty involved on such shortages which could not be explained and the respondent are liable for general penalty for the said discrepancy. Since no penal provision is ....