AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 384
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....foresaid goods totally valued Rs. 25,85,613/- under Section 34 of Excise Act, 1944. Further, I order to appropriate the Bank Guarantee of Rs. 81,000/- (Rupees Eighty One Thousand Only) which was furnished by the noticee, against said redemption fine. (ii) I confirm demand of Rs. 5,263/- (Rupees Five Thousand Two Hundred and Sixty Three Only) on the shortages of finished goods on the party, under Section 11A of the Central Excise Act, 1944. (iii) I confirm the Interest, on demand confirmed above at (ii) above, at the applicable rates from the party, under Section 11AA of the Central Excise Act, 1944. (iv) I impose penalty of Rs. 3,28,465/- (Rupees Three Lacs Twenty Eight Thousand Four Hundred and Sixty Five Only) upon M/s Shree Shyam Pipes Ltd in terms of Rule 25 of Central Excise Rules, 2002 read with section 11AC of the Central Excise Act, 1944. (v) I order to confiscate the vehicle (truck bearing No HR 55P 4363) found to be carrying goods found in excess as per detailed discussed above. I impose redemption fine of Rs. 20,000/- (Rupees Twenty Thousand Only) upon M/s Hari Cargo Movers, Randhir Yadav Compound, Sihi Sikdapur, Kherki Daula, Gurgaon,....
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....or the appellant. On going through the impugned order, I find that the appeal stands rejected for non-deposit of 7.5% of the confirmed demand in terms of provisions of Section 35F of the Central Excise Act. I find that appellant has now deposited 10% of demand at the time of filing of appeal before Tribunal. As such, I set aside the impugned order and remand the matter to Commissioner (Appeals) for decision on merits. 2. Appeal is thus allowed by way of remand." 2.4 Commissioner (Appeal) has vide the impugned order referred in para 1, dismissed the appeal. Aggrieved appellant have filed this appeal. 3.1 I have heard Shri D. K. Tyagi, Advocate for the appellant and Shri Sandeep Pandey, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that: ⮚ Shortage of 84.7 Kgs found on physical stock verification is due to human error in identifying the exact size of pipes since weighed in small quantity on a kanta of I MT capacity. The shortage of 84.7 kgs in available stock of 2530 Kgs cannot be on account of clandestine clearance. Reliance is placed on the decisions reported at [2015 (325) ELT 193 (T-Del)], [2015 ....
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....oceedings were carried out and recorded in the presence of independent witnesses, (iii) panchnama records physical verification of stock and stated shortage/ excess of stock, (iv) the appellants admitted the difference in stock in statements recorded on 28.05.2015 (v) the panchnama was not questioned at any point of time and (vi) the statements have not been retracted at any point of time. 5.3 Further, I observe that during search operation, the departmental officers have found that un-accounted goods are lying in the factory premises and the appellant is not maintaining any requisite records of purchase, production and sale of finished goods as well as raw material, shortage of finished goods and a truck loaded with scrap without documents. The search proceedings do not suffer from any infirmity, the statements are recorded in conformity with law and not retracted. The panchnama proceedings of search process were carried out in accordance with the relevant statutory provisions in the presence of independent witnesses. 5.4 Further, I find that the difference (shortages/ excess) in stock, recorded in the presence of the independe....
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....aintained by the Hon'ble Supreme Court. Further in the case of Indian Cork Mills Ltd vs. CCE, Bombay 1984 (17) E.L.T. 513 (Tri), it was held that non accounting of goods cannot be technical breach and the department is not required to prove guilt beyond doubt." 4.3 I am constrained to observe that the findings recorded by the Commissioner (Appeal) in the impugned order, to the effect that the appellants were not maintaining statutory records etc is contrary to the provisions of Rule 22 of Central Excise Rules, 2002 and the panchnama itself. Rule 22 of Central Excise Rules, 2002 provide as follows: "22. Access to a registered premises.- (1) An officer empowered by the Commissioner in this behalf shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue. (2) Every assessee shall furnish to the officer empowered under sub-rule (1), a list in duplicate, of all the records prepared or maintained by the assessee for accounting of transactions in regard to receipt, purchase, manufacture, storage, sales or delivery of the....
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....n 12.05.2015 under invoice No 67 dated 08.05.2015 of M/s RHJ Industries Pvt Ltd., Daman was 10.00 MT (16 mother tubes). The details of the vehicle and details of the goods were found to be in order. The stock of finished goods was verified on the basis of the agreed upon method i.e. adding the weight after weighing all the goods. The weighment of stock of finished goods was done on the weigh bridge installed in the unit having capacity to weigh 1.00 MT. The stock position of Finished goods so obtained were compared with the Book Balance maintained by the party and is reflected in Annexure A to this Panchnama. On comparing the physical stock of finished goods as verified by the officers with the Book Balance i.e. RG 1 register maintained by the party certain differences (shortage/ excess) were noticed. Further while taking round of the factory and conducting the physical verification of the stock of finished goods a truck bearing Registration No HR 55 P 4363 was found inside the factory loaded with copper scrap. On being asked whether any document such as invoice/ challan has been prepared in respect of the goods loaded in the truck, Shri Sharma informed that no document ha....
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....d is contrary as the entire case of the department is based on the Book Balance in the book of accounts and physical stock found at the time of visit. Further department itself has resumed these documents as seen by the above Annexure. Thus the decisions relied upon by the Commissioner (Appeal) in the impugned order for invoking the concept of administrative inconvenience etc., would not apply to the present case. In any case when the entire case is based on the records maintained by the appellant I do not find any justification in such observations which have been reproduced by the Commissioner (Appeal) in routine and stereotype manner without even examining even the panchnama. 4.4 Relevant extract of the Annexure A to Panchnama dated 12/13/05.2015 is reproduced below: Copper Pipe Quantity in Kgs Amount in Rs S.NO. Description Book Balance Physical Verified Difference Rate/ kg Value Duty 1 ¼"x23-24 SWG 220.20 220.20 0.0 0 0 2 ¼"x22 SWG 1.6 1.60 0.0 0 0 3 1/4" x 16-21 SWG 406.40 491.00 84.6 516 43654 5457 4 1/2" x 23-24 SWG 23.00 ....
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....5 2585615 323202 S.No. Name of goods Description Shortage in stock (in Kgs) Rate/ kg Value Duty 1 Copper Pipe 1/2" x 23-24 SWG 1.4 511.03 715 89 2 ½" x 22 SWG 0.3 506 152 19 3 ½" x 16-21 SWG 18.2 481.03 8755 1094 4 3/8" x 16-21 SWG 12.1 487.03 5893 737 5 7/8" x 16-26 SWG 10.1 481.03 4858 607 6 1^1/8" x 16-26 SWG 16.5 487.03 8036 1004 7 31.8 mm x 16-26 SWG 2.5 494.18 1235 154 8 38.1 mm x 16-26 SWG 23.6 528 12461 1558 84.7 42105 5263 4.5 From the figures as indicated in the tables above it is observed that the quantum of excess and shortages determined by the exercise of stock taking is negligible in all cases except for the scrap. The stock taking errors and the weighing scale errors etc could have accounted for the shortages and excesses. The decision relied upon in the impugned order, the will not support the case of department without any explicit and conclusive evidence in respect of the clandestine ....
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....lay in making entries in the relevant form, the goods were not liable for confiscation. Rule 173Q of the Rules no doubt empowers confiscation of the goods on the ground that the entries are not properly made. However, every failure to make the entry or every defect therein does not constitute the basis for confiscation of the goods, as long as they are not removed from the premises. It is too fundamental to be reaffirmed that the liability to pay the excise duty arises only when the manufactured goods are removed from the premises. The rest of the measures are only regulatory in nature. Confiscation of goods that are not removed from the premises can be done, only when clear evidence exists to the effect that the goods were not manufactured but were stored with an oblique motive. No such grounds are even pleaded in the instant case. The Commissioner as well as CEGAT took note of the judgment of this Court in M/s. Southern Steel Ltd. v. Union of India and others - 1979 (4) E.L.T. (J402) (A.P.). We are of the view that no case is made out for directing CEGAT to refer the questions to this Court." Hon'ble Punjab and Haryana High Court has in case of AAR Kay Industries [2015 (319) E....
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....td. [2010 (258) E.L.T. 60 (Guj.)], cited by the Ld. Advocate, the Hon'ble High Court of Gujarat held as under : "3. As can be seen from the impugned order of Tribunal and the record, the respondent has tendered explanation as to why the necessary entries were not made in the statutory records. The said explanation has not been disproved by any evidence to the contrary. The Tribunal has found that the explanation tendered is reasonable and does not warrant any confiscation of goods. 4. It is an accepted position that the liability to pay duty arises at the point of time when the goods are to be removed from the factory premises. Admittedly, the goods were found lying in the factory premises. Therefore the occasion to pay duty had not arisen. In other words, the liability to pay duty had not accrued in law. In the circumstances, it is not possible to accept the contention of the appellant that an inference should be drawn that the goods were to be clandestinely removed and hence confiscation was permissible. Such an inference should be possible if there are other surrounding or attendant circumstances. In the present case, no such evidence exists on record. The Trib....
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.... Advocate for appellants also, CESTAT held as under : "5. I have considered the submissions made at length and perused records. The issue involved in this case is regarding the confiscation of the goods which were found unaccounted in the RG-1 of the respondent. It is undisputed that these goods were found in the factory premises of the respondent. The allegation in the show cause notice that these goods were kept without entering in the records, with an intention to clear the same without payment of excise duty, is not supported by any evidence. Further, it is also seen that as regards the allegation of the clandestine removal in respect of other show cause notice, which also was issued based upon the very same investigations and visit by the officers, the respondent had settled the issue before the Settlement Commission. The proceedings which were settled by the respondent before the Settlement Commission cannot be brought into play for holding against the respondent in another show cause notice. 6. Be that as it may, I find that the goods once they are in the factory premises, no penalty can be imposed on the respondent under the provisions of Rule 173Q, as has....
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....36.240 MT of Sponge Iron is concerned, I find in a perusal of Para 3 of panchanama dated 2-9-2005/3-9-2005 that the capacity of the 5 Hoppers (bins) were clearly not determined by the officers following metric system bit were accepted as declared by Shri Sunil Kumar Bhoyer, and on that assumption the stock was determined by taking a dip reading. Such method have not found approval for determining the stock, especially the dipreading method may not result in correct stock determination. The appellant has supported this contention by placing reliance on the decision in the case of Orient Cement v. CCE - 1995 (79) E.L.T. 643 (T) and IOD v. CCE - 2003 (158) E.L.T. 49 (T) referred to at Para 3.15 supra. The shape of a Hopper and the submission that the storage capacity would not be uniform are factors which would compel one to arrive at a finding that the dip reading method applied cannot determine the actual quantity of stock. The acceptance of Shri Sunil Kumar Bhoyer ought not to have been taken as confirmatory unless such declaration relating to the stock position was confirmed by physical verification merely because the stock taking method has been objected to at a later date is no ....