ORDER
M.P. Bohra, Member (J)
1. Heard Shri K.K. Banerjee, ld. Advocate for the appellants and Shri K. Sanyal, ld. JDR for the respondents.
2. Shri Banerjee submits that the demand is barred by limitation. In support of his contention, he relies on the following decisions :
(i) Commissioner of Central Excise, Jsr. v. TISCO : 2001 (137) E.L.T. 571 (Tri. - Kolkata); (ii) Bharat Laundry : 1991 (54) E.L.T. 316 (G.O.I.).
He further submits that the physical verification of stock was not conducted. The stock verification was done within 1.5 hours. No weighment slip was provided to the appellants in spite of request. The stock of the goods was ascertained on eye estimation basis and in the absence of weighment, no duty liability can be fixed or charged of clandestine removal can be proved. In support of his contention, he relies on the decision in the case of Micro Forge (I) Pvt. Ltd. v. Commissioner of Central Excise, Rajkot reported in 2004 (169) E.L.T. 251 (Tri.-Mumbai). He, therefore, submits that the appeal may kindly be allowed.
3. Shri Sanyal supports the impugned order.
4. In the present case, the Anti Evasion Unit of Howrah, North Division, visited the factory of the appellants on 20th July, 2000. A show cause notice was issued on 25th January, 2001. In the case of Commissioner of Central Excise, Jamshedpur v. TISCO, this Bench has held as under :
“Demand – Limitation – Deficiencies found in stock verification report -Provisions of Section 11A of Central Excise Act, 1944 to apply – Erstwhile Rule 233A of Central Excise Rules, 1944.”
Therefore, the demand is time bar.
5. In the present case, no actual physical verification was done by the Anti Evasion Team. No actual weighments of the goods were done by the authority concerned and no such slips were provided to the appellants even after their request. Whereas the physical stock report conducted on 20th July, 2000, represents the actual weighment of the shortages. How the authority arrived at such conclusion is not clear. They have not disclosed the basis on which the deficiency was arrived at. No doubt, the physical weighment is not the only method of verifying the stock but there must be some basis on which the stock can be verified. The goods may be counted and then multiplying it with certain weight. But in the present case, no such method was adopted nor any specific method has been described in the order-in-original or order-in-appeal. It was done only on the basis of eye estimation which cannot be the basis for quantifying the demand for deciding the charge of clandestine removal. Similar view has been expressed in the case of Micro Forge (J) Pvt. Ltd. referred to above wherein the Tribunal has held as under :
“Demand – Clandestine manufacture and removal – Shortage of finished goods – Proof of – Average weight of a single forging of each type taken and multiplied by number of pieces of relevant items (unit) – Stock position arrived on basis of an estimation – Such method of stock taking can lead to a suspicion of shortage, but cannot be a substitute for proof of shortage -Unless the department is in a position to clearly demonstrate the fact of shortage through actual physical weighment of entire stock, allegation of shortage of stock and consequent illicit removal of finished goods not sustainable – Section 11A of Central Excise Act, 1944 read with Rule 9(2) of erstwhile Central Excise Rules, 1944 – Rule 4 of Central Excise Rules, 2002. [para 5)] – Appeal allowed.”
The present case is squarely covered by the ratio rendered in the case of M/s. Micro Forge (I) Pvt. Ltd. Accordingly, appeal deserves to be allowed. Consequently, I set aside the impugned order and allow the appeal with consequential benefit to the appellants, if any.
Pronounced in the open Court.