2025 (7) TMI 1535

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....ed. 2. The facts of the case are that the Appellant is engaged in the manufacturing of electric motor, fans and parts thereof. The Appellant is having more than ten thousand items and follows a computerized system of accounting for movement of inputs as well as finished goods. The Cost Audit Report of the Appellant for the period April, 2009 to March 2010, inter alia contains the details of physical verification of raw materials, work-in-progress. it was found the said Cost Audit Reports are in respect of examination of Books of Accounts of the Appellant prescribed under clause (d) of section 209(1) of the Companies Act, 1956 (1 of 1956) and other relevant records by the Cost Accountants, appointed as Auditor under section 233B of the sa....

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.... (1.79) 1.54 (0.25)       D. Demand raised in the impugned SCN @10.3% only with respect to shortage of 270.38 lakhs, without considering the excess 27.85 5. In view of the aforesaid table, it is clear that the net shortage is only 0.25%, however the demand has been raised considering the shortages whereas the excess has been totally ignored by the department. They further submitted that net shortage as a percentage of materials consumption is around 0.16%. This difference is negligible and it is to be ignored. We also find that there is no shortage noticed on the finished goods. However, the demand has been raised considering the shortages, whereas the excess has been totally ignored by the Dep....

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....held as under:- "9. On going through the records placed before us, as per the chart produced by the appellant, it shows that there is certain excesses and certain shortages on the raw materials and work in progress. There is no shortage on finished goods. If we adjust all the figures of shortages and excesses, then the difference is very negligible and it is to be ignored. We have examined the decision in the case of National Engineering Industries Ltd. (supra), wherein this Tribunal has held as under:- "5. The admitted facts of the case are that the assessee is having computerized accounting which manages end to end operations i.e. from the set of procurement of raw material to sale of finished goods. It is also admitted ....

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....d in Widia India Ltd. v. CCE, Bangalore reported in 2007 (207) E.L.T. 562 (Tri. - Bang.) later affirmed by the Hon'ble High Court of Karnataka in 2010 (255) E.L.T. 36 (Kar.). Another important point to be noted here is that while the whole discrepancy in physical stock has come to light only as per the stock taking conducted by the assessee, there is no allegation or evidence to the effect that the shortages/excesses are not attributable to accounting errors or complexities but are due to unaccounted clearances finished goods and consumption of raw material. In the absence of any such corroboration the assessee's plea on the non sustainability of order reversing credit or demanding duty has strong force and is to be admitted. Accordingly, w....