ORDER
Shri SL Peeran (oral)
1. This appeal challenges the confirmation of duty demand of Rs2,04,553.69 under Rule 9(2) read with Section 1A of the CE Act, 1944 on the alleged eye estimation of shortage arrived at in respect of man made fabrics, cotton fabrics and clothes. The officers of the department visited the factory of the appellants and asked the Manager Shri Gupta how much shortage could have been there, he gave an eye estimation of some figures and on that basis demanded duty. No physical verification was done in respect of the impugned proceedings. However, in respect of the impugned proceedings. However, in respect of these proceedings, where physical verification was done by the department, the department was satisfied that entries in the Registers had been made and the proceedings were dropped. Appellants contested the case by filing reply to the show cause dated 8.4.93 contending that there was no verification of the goods lying in the factory on the date of visit and the mere eye estimation cannot be the basis for demand of duty more particularly on the basis of rough estimate given by the officer present at the time of visit of the officers to the premises. It is the contention of the learned Consultant for the appellants that this basic plea was not accepted by the Deputy Commissioner and he has proceeded to confirm duty merely on the basis of eye estimation given by the appellants’ Manager alone by holding that in a case where there was stock of materials as competed in Scn. It was held that it was not possible to carry out physical verification of the goods. The learned Consultant submitted that they agitated the matter before the Commissioner (Appeals) also and pointed out that there are Apex Court judgements and the Tribunal judgements which clearly laid down that the burden is on the department to prove shortage and mere statement cannot be the basis for confirmation of duty demand. However, the Commissioner (Appeals) although admits that the shortages in the stock did not establish that clandestine removal has taken place, yet gave a finding whereby he has noted that as the manufacturer was working under SRP, his statement can be taken for the purpose of confirmation of demand made by the Dy Commissioner on the eye estimation given by the Manager and the actual stock lying during the process should be the correct shortage. He has noted that unless reasonable explanation is offered as to how the shortage occurred, the assumption should be drawn that the appellants had removed the quantity alleged to have been found short. The learned Consultant submitted that this type of finding is not approved by the Apex Court and the Tribunal. Mere assumption and presumption cannot be the basis for confirmation of demand as held by the Supreme Court in the case of Oudh Sugar Mills vs. UOI reported in 1978 ELT (J-172). The Tribunal in the case of Madhu Food Products vs,. CCE reported in 1995 (76) ELT 197 has held that when the evidence of shortage or removal has not been produced by the department, the demand having been made on rough estimation, the demand is not sustainable in law. While arriving at this conclusion the bench looked into a large number of judgements on this issue. He also relied upon the single Member judgement of the North Regional Bench in the case of KL Steels reported in 1998 (100) ELT 406 wherein it has been held that for confirmation of demand, excess or shortage has to be as certained on actual weight of pieces and that too on actual weighment. This order was also based on a number of other judgements. He also relied upon the judgement in the case of UP State Sugar Corpn vs. CCE reported in 2000 (127) ELT 83 wherein it has been held that for the purpose of confirmation of demand on charge of clandestine removal the burden is on the department and it cannot proceed on the basis of a different route. The method adopted in the present case on the basis of presumption and assumption is not sustainable. He submits that all these judgements would apply on all fours to the facts of the present case. The Commissioner (Appeals) admits that the shortage in stock did not establish that clandestine removal has taken place and the confirmation of demand is on presumption on eye estimation.
3. The learned DR submits that in a case where cloths were in running length in thousands of meters it was practically difficult to carry out physical measurement. Therefore, the appellant was called upon to give an eye estimation and he gave the figure. Having given the figure they cannot now resile and go back and blame the departmental officers. He submits that eye estimation of shortage was with regard to entries made in the RG1 Register and therefore, it should be accepted despite Commissioner (Appeals)’ finding. He further submits that the Punchanama given was transparent and not disputed at all.
4. On consideration of the submissions, we find that there is lot of force in the submission of the learned consultant. As can be seen from the records, the case proceeds on the basis of presumption and assumption. The figure was given by the manager of the appellants in the factory. The Commissioner had clearly held that this cannot be the basis for clandestine removals, yet he concluded that presumption can be drawn on the basis of the statement of the manager. This finding is not in consonance with the judgement of the Apex Court judgement in the case of Oudh Sugar Mills (supra) wherein it has been clearly laid down that burden of clandestine removal is required to be discharged by the department and mere assumption or presumption cannot be the basis for raising demand. Although in the present case Manager has given some figure the department had chosen to measure some quantity and found the same to be in order and dropped the proceedings. When it was convenient for the dept to do physical verification for some portion of the goods, they should have done the same exercise for the other portion also. Merely because eye estimation was given it does not absolve of the department’s responsibility to carry out physical verification of the goods and confirm demand duty on that basis. In view of the clear cut law laid down by the cited judgements, the appellants prayer is required to be accepted by setting aside the impugned order and allowing the appeal. Ordered accordingly.
(Dictated and pronounced in open Court)