TaxTMI 
TaxTMI 
2016 (8) TMI 531
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....s conducted on 01/8/2012 in the factory premises. The officers found that a huge the stock of MS angles and MS flats of different length and breadth was lying in a haphazard way, difficult to count/value. Thereafter the officers with the consent of the Partner present, Shri Somit picked up 10 pieces of MS Ingots at random and recorded the weight and accordingly picked 10 pieces of MS Bars. The total weight so recorded was divided by 10 and the same was multiplied by the total number of Ingots and Bars available. Accordingly stock verification statement was drawn and in the stock of finished goods of MS Bar against opening stock of 109.215 M. T. stock was worked out at 103.950 M.T, thus the difference or shortage of 5.265 M.T. So far the sto....
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.... of Rs. 1,39,062/- (Rs. 23,232/- on finished goods plus Rs. 1,15,830/- on the material). The appellant contested the show cause notice stating that the proposed demand is on presumption and assumption and that there is no actual shortage. It is further urged that the manner in which the stock was taken gives only some approximate figure and there is bound to be variation and as such no adverse inference can be drawn for the variation which is normal. In the case of finished goods the variation is less than 5% and in the case of raw material although the variation in adequately explained the same is not more than 10%. The SCN was adjudicated and the proposed demand confirmed and equal amount of penalty was imposed under Rule 25 of Central Ex....
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....lmost equivalent to the difference or shortage in weight at 30.230 M. T. Further without verification of the fact asserted by the appellant the Adjudicating Authority and the Id. Commissioner have erred in rejecting the cogent explanation without actual verification of the same. He further urges that in view of the possibility of variation in such method of verification of stock the difference found is normal variation and accordingly prays for setting aside the impugned order with consequential relief. The Id. Counsel further relies on the ruling of Hon'ble Allahabad High Court in the case of CCE versus Meenakshi castings where in the Honourable High Court held that in absence of any evidence of clandestine removal, only on the a....
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.....L.T. 392 (Mad.) wherein the case of stock taking conducted on the basis of eye estimation, the question being considered was, whether stock taking done on the basis of eye estimation was proper. The High Court did not accept the findings of the Commissioner (Appeals) that the shortage could not be ascertained in the manner done by the Department. Further the assessee has been unable to establish that recording of shortage was erroneous. Further it is a finding of fact that the Tribunal on the statement drawn in the Mahazar/Panchnama and other records on which the High Court did not dwell further to come to a different conclusion. Further held that non production of the Panchnama witness was not fatal to the case. It was further obser....
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....f the Customs Act, but the same is to be treated as a report to investigating officers and the evidentiary value of the same cannot be underestimated. 6. Having considered the rival contentions I find that in the method of stock verification adopted there is bound to be variation. Further the variation found is about 10% in the case of raw material and less than 5% in the stock of finished goods which I hold as normal variation in such method of calculation. Secondly I find that the appellant had given cogent explanation regarding the shortage of raw material within 5 days of inspection, by stating that the raw material charged in the furnace had escaped to be noticed in the stock verification and the same was not entered in the stock rec....