ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against the order in appeal dated 23.2.2004 which upheld the order in original vide which demand of duty was” confirmed and penalty was imposed on the appellant.
2. The relevant facts that arise for consideration are that the officers of Central Excise visited the factory premises of the appellant on 1.7.97 and conducted physical stock verification. On such stock verification, the officers found shortage of the finished goods as recorded to the physical stock. On a reasonable doubt that the appellant was involved in clandestine removal of the goods, show cause notice was issued to the appellant for the demand of duty on the finished goods found short during stock verification. The adjudicating authority, after considering the contentions put forth by the appellant, confirmed the demand and also imposed penalty. On an appeal, commissioner (Appeals) also concurred with the findings of the adjudicating authority.
3. The learned Advocate appearing on behalf of the appellant submits that the shortage found by the authorities during the factory visit was not correct. It is his submission that the officers did not consider the stock available in one tank and arrived at the shortage by considering the stocks only in four tanks. It is his submission that as regards the demand of duty arrived at by the officers against the suspected clandestine removal, based on the loading charges, the same is incorrect in as much as, the allegation is based on a cash voucher which indicated payment of loading charges to the contractor. He relied upon the case of Universal Poly 2001(130) ELT 288 for the proposition that some tangible evidence should support allegation of clandestine removal.
4. The learned DR on the other hand, submits that the advocate had not challenged the physical stock taking nor has controverted the findings of the physical stock taking.
5. Since the shortage is indicated in the physical stock indicating and there being no explanation given by the appellant, on such shortage, the presumption is that the goods have been removed without payment of duty. As regards the duty demand on the clandestine removal of 26 drums, it is his submission that the cash voucher for loading of the drums is correlated with the statement and weighted which indicated the same physical loading while material which is 6 MTs of weight.
6. Considered the submissions made by length by both parties and perused the records. As regard shortage of Anthracene oil, I find that the officers had taken the stock by method of dip reading in respect of the four tanks. The appellant has not disputed these readings. The officers recorded the statement of Shri Bansal who is the Prop, of the appellant company on 1.7.97 wherein he was asked the following question for which he answered as under:
Question – You told on 30.6.1997 pitch 40, PCM 10, Aanthracene 135, raw material 107 on estimation but on 1.7.1997 found pitch 36, PCM 9, Anthracene oil 14.155 cub. Mtr in four tanks in the presence of supervision P.S. Murthi and measurement and calculation was done before Central Excise officers and punchas. What do you say in this regard?
Answer – On 1.7.1997, I was not there. P.S. Murthi is labour supervisor and he gave estimated calculation to Central Excise officers and panchs, he does not know working of unit. This is the reason that one full tank of bye-product having appear 100 cub. Mtr was not taken into account. From the above reproduced paragraphs of the statement of the Propritor, it is seen that the officers had not taken into account stock of one tank of by product, having 100 Cu Mt. If that be so, applying the formula of calculating weight the shortage as alleged, may not arise at all. None of the lower authorities have considered this fact which has been indicated in the statement of the Proprietor. To my mind, if this stock is taken into account by the authorities, the conclusion may have been different. The lower authorities have also not controverted this fact as regards the existence of full tank of by product. In the absence of any such contrary evidence, it has to be considered that authorities have not taken into consideration the stock which was in the tank, not accounted for. Since the lower authorities have not given any finding on this fact, to my mind, the impugned order to the extent it confirms the shortage of the said anthracene oil is not correct and has to be reconsidered by the lower authorities. In the fact and circumstances of the case, the impugned order to the extent it confirmed the demand of duty on the shortage (sic) of Anthracene oil is liable to be set aside and the matter remanded back to the adjudicating authority to consider the issue afresh. The adjudicating authority will decide the matter afresh after granting an opportunity of personal hearing to the appellant.
7. As regards the demand of duty on the goods alleged to have been clandestinely removed by the appellant, based on the weighment and loading of 26 drums, I find that the lower authorities have not brought on record that there was clandestine removal of the goods. The evidence in the form of statement of the supervisor of the weight bridge is indicative of the fact that on that date, the services of weigh bridge was used by the vehicle bearing Regd. No. PCM 9988 for weighing the goods loaded in that truck. The supervisor of the weigh bridge also confirmed that there was load in the truck on that very day. The authorities have found that there was no Central excise invoice issued on that date. The evidence gathered by the lower authorities in this regard is uncontroverted and the demand of duty on such clandestine removal is correct and the impugned order holding so, does not require any interference.
8. As regards the penalty imposed on the appellant, I find that the penalty has been imposed based on the consolidated allegation that there was shortage of goods and clandestine removal. As I have held that the shortage of the goods was incorrect, the question of imposition of penalty on the appellant has to also to be reconsidered by the adjudicating authority while the re-adjudicating the issue, after considering the observation in respect of the clandestine removal of 26 drums from the factory of the appellant.
9. Accordingly, the impugned order is set aside to the extent as indicated in the above paragraphs and the appellant appeal allowed partially as indicated.
(Order pronounced on 09/2/07)