ORDER
S.K. Bhatnagar, Vice President
1. This is an appeal against the order of Collector (Appeals), New Delhi dated 12-11-1991.
2. Ld. Counsel stated that the appellants is a unit under Co-operative sectorof the State Government and the Department of Public Enterprises, engaged in the spinning of cotton yarn. Central Excise officers visited the appellant’s factory on 20-3-1989 and conducted various checks and verifications of the cotton yarn lying in the bonded store-room. No discrepancy, whatsoever was found, the officers again visited the factory on 23rd and 24th of March, 1989 and verified the cotton yarn lying in loose condition in the finishing room. As a result of verification, yarn of various counts was allegedly found short to the tune of 36,803.130 kgs. and yarn of various counts was allegedly found in excess to the tune of 21,076.150, as per the inventories drawn on the spot. The excess yarn found was seized by the officers vide panchnama dated 24-3-1990. A show cause notice dated 14-6-1989 was issued. The appellant inter alia, contended that the excesses and shortages of the yarn are not real but apparent on account of various factors. It was explained that the workers who are paid on piece rate basis manipulate to whom more production so as to earn more resulting in the actual shortage of the yarn then the recorded balance. Furthermore, certain weighment errors creep-in on account of defects in the weighment scale as also on account of the fact that production clerk, who has to weigh the production of approx. 100 workers in half an hours time, deducts the weight of the containers, tubes, cones etc. from the total weight of the yarn-filled container to arrive at the actual weight of the yarn unwound and reeled by a particular worker in the process, the weight of yarn recorded does not reflect the actual yarn spun. It was further contended that the cotton yarn being hygroscopic in nature would show different weights at different times resulting in excesses or shortages of the yarn. The appellant also contended that their unit being a co-operative sector undertaking of the State, no measure could be attributed to it; that the total variation was only to the tune of 0.12% of the total production and being negligible is liable to be ignored; that there being a excise range office at their factory gate itself, the possibility of any clandestine removal is virtually nil; that as per the enquiry report conducted under the Rajasthan Co-operative Societies Act in pursuance to the seizure, no evidence of any unauthorised removal was found. Subsequent, to this, the appellant vide their letter dated 5-6-1990 put forth additional submissions and drew the adjudicating authorities attention to Sr. No. 32 of the Annexure B to the show cause notice where the description of the yarn under count’s column has been given as mixed. It was pleaded that quantity of 18,302.16 kgs. of this mixed yarn did not reflect any particular count and as such ought to be adjusted against the variety of yarn found short.
3. Ld. DR drew attention to the impugned order and reiterated the department’s contention as contained therein.
4. I have considered the above submissions. I observe that the department’s case is based on physical verification in the presence of the representatives of the appellants and independent witnesses and evidently stocks and accounts did not tally and both shortages and excesses were noticed. Therefore, the violation of Central Excise provisions in this regard is apparent. In their appeal memo the appellants have themselves admitted scope for manipulation and wrong weighment. To ensure that the labourers or the staff are not able to manipulate or the weight is recorded correctly is the responsibility of the management. It is for them to take such steps as may be necessary to tighten up control and ensure due compliance with the Central Excise provisions. But once the stocks and accounts do not tally the department is justified in proceeding against the appellants. Insofar as the request for adjustment is concerned they could be so adjusted only in respect of an item of the same type or variety and not otherwise. The appellants have referred to the hygroscopic natvire of yarn but what is noteworthy is that the inspection was conducted on 20th March, 1989 i.e. neither in rainy season nor at the height of summer. In any eventuality variations due to absorption or release of moisture cannot account for such a larger shortage or excess which is in thousands of kgs. Their contention that eye estimation is resorted to by their officials also is not sufficient to explain such a large difference. The appellant’s explanation therefore cannot be considered as satisfactory. The officers below are right in pointing out that the management is required to maintain its weighing machines in proper condition. The appellants have also referred to an enquiry conducted by Co-operative department but it was observed that even this report indicates that there was seriovis irregularities in relation to the records maintained for production and clearance of the goods. However, a copy of this report has not been filed in the Tribunal and it has not indicated as to which period it pertains. There is also a reference to an enquiry report in the order of Collector (Appeals) and letters dated 7-7-1989 and 30-9-1989 from the Cooperative department have been filed in this connection. The fact that no theft or unauthorised removal has come to the notice of the Project Director is not by itself sufficient to establish the facts inasmuch as department’s case is based inter alia on physical stock taking and there is already an admission on record regarding the irregularities and manipulation of records in the appellants own submissions. In any eventuality this letter by itself does not constitute a final report which was yet to be approved by RCS as mentioned in the letter and there is no indication as to what was the outcome of the final report. Looking to the totality of facts and circumstances it is evident that the appellants have not been keeping their stocks and accounts properly and were liable to action for violation of the Central Excise provisions mentioned in the impugned orders.
5. Further I find that the Collector (Appeals) has already taken a lenient view and reduced the fine and set aside penalty which indicates that sufficient consideration has already been shown. In the circumstances, there is no cause for interfering with the orders. Hence, the impugned order is confirmed and the appeal is rejected.