ORDER
V.P. Gulati, Member (T)
1. This appeal is against the order of the Collector of Central Excise (Appeals), Hyderabad, under which the learned Collector (Appeals) while discarding the basis under which shortage was held against the appellant in the original authority’s order has held that there was shortage to the extent of the quantum that could be carried in the bags which were found short in the factory.
2. Shri T.K. Seshadri, the learned Counsel for the appellant referring to the order of the original authority pointed out that the original authority had come to the conclusion that the appellant had not accounted for the quantity of 997.25 MT taking into consideration RG-1 Register entries and also the quantum as was physically ascertained by dip reading of the silos. He pleaded that shortage of bags was also found but no adverse finding had been entered against the appellant taking this shortage into account. The learned Counsel pleaded that the appellant had challenged the order of the original authority that the shortage worked out based on dip reading was not done properly for arriving at the quantum of cement available in the factory. He pleaded that the same plea was adduced by the appellant before the lower appellate authority and the Ld. lower appellate authority appreciated the appellant’s plea and has held as under:
“The appellants contended that in such huge silos even a marginal error can result in a variation of 200 MTs in a silo. Since the Officers have not taken the dips of the required number in 3 silos it is quite possible that their estimation is wrong.”
He pleaded that after having held that shortage ascertained by dip reading could not be basis for arriving at the quantum of cement removed clandestinely, he has gone on to say as under in his order :
“It has to be admitted that the Department has not adduced any evidence to prove illicit removal of cement from the factory. Mere shortage of goods in the, factory does not necessarily mean that the goods found short were removed without payment of duty even though such shortage leads to a strong suspicion. The Department mainly relied on two factors to allege the illicit removal of 977.250 MTs of cement. The first factor is that stock taking revealed that 997.250 MTs of cement was found short of the RG-1 balance. I have discussed earlier as to how this figure is arrived at. The methods adopted to arrive at the stock of cement that should be lying in the factory, were imperfect to say the least”.
He pleaded that the lower appellate authority in his order has taken note of the shortage of bags and has held that quantum of cement which can be contained in the bags found short can be taken to have been removed without payment of duty. He pleaded that to say the least, there is apparent contradiction in the order of the lower authority. He pleaded that in any case the appellant was not put on notice in regard to the shortage of cement based on shortage of bags. He pleaded that the basis for arriving at the shortage was dip reading and once this has been given a go-by by the lower appellate authority, he has not laid any basis for holding that the shortage of bags could be taken to be indicative of the shortage of cement. He pleaded that in this background, the impugned order may be set aside.
3. Shri J.M. Jeyaseelan, the learned DR pleaded that normally dip reading is the method adopted for arriving at the quantum of cement available in the factory. In case this method could not be relied upon, the learned lower authority has rightly taken into consideration the shortage of bags for arriving at the shortage of cement and he prayed for upholding the impugned order.
4. I have considered the pleas made by both the sides. I observe that proceedings were drawn against the appellant on the basis of dip reading of the silos based on which shortage of 997.250 MTs of cement was found and in respect of which duty was demanded. The original authority had also found that there was shortage in bags in the appellant’s factory but no adverse comments were made against the appellant so far as the shortage of bags was concerned. The only verifiable method adopted to ascertain the shortage of cement was dip reading of the silos. The learned lower appellate authority has accepted the appellant’s plea that dip reading was not properly taken and accordingly the learned lower appellate authority discarded the dip reading adopted for the purpose of arriving at the total quantum of shortage in the factory. Having done that, the learned lower authority has gone on to conclude that the alleged shortage of cement is corroborated by a quantity of 5044 bags not properly accounted for in the factory. I observe that when the basis for arriving at the shortage of cement adopted was dip reading and when that very basis has been discarded as defective by the learned lower appellate authority, there was no reason for the learned lower authority to have taken into consideration the shortage of bags for arriving at the shortage of cement in the factory. The lower appellate authority himself in his order has observed that the Department has not adduced any evidence to prove illicit removal of cement from the factory and that mere shortage of goods in the factory does not necessarily mean that the goods found short were removed without payment of duty even though such shortage leads to a strong suspicion. In the concluding portion of his order, the lower appellate authority has gone on to say that the Department has not established the case beyond shadow of doubt but the absolute proof is not necessary in a Departmental proceedings. I observe that the Ld. lower appellate authority having discarded the basis that was adopted by the original authority has not laid any basis to first hold that there was shortage of cement and has not given any reason as to how and on what reason the shortage could be presumed. Taking into consideration the facts and circumstances of the case I hold that the shortage has not been established by evidence and therefore the appellant has to be given the benefit of doubt. I, therefore, set aside the order of the lower appellate authority and allow the appeal.