COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD Vs. PREM INDUSTRIES

JUDGEMENT

(1.) BEING aggrieved with the order of Commissioner (Appeals) vide which he has rejected the Revenues appeal against the order of Astt. Commissioner, Revenue has filed further appeal before Tribunal.

(2.) AFTER having heard both the sides and going through impugned order, I find that the appellants factory was visited by the Central Excise officers on 7th and 8th May, 2003. During the course of search and physical verification, shortage of 76,577.5 L.Mtrs finished fabric was noted. The statement of Shri Patel, Manager of the respondent firm was recorded admitting the shortage and deposing that the same was on account of clearances made without payment of duty. The duty of Rs. 4,50,025 was also paid under protest.

(3.) ON the above basis, proceedings were initiated against the assessee, which culminated into an order passed by Astt. Commissioner dropping the demand. Revenue filed an appeal, which was rejected by Commissioner (Appeals), who observed as under : I have gone through the facts of the case, grounds of appeal filed by the Department and reply filed by the respondents and also the written submissions. I find that there were many discrepancies in the investigation of the case. The respondents were maintaining their stock as per RG1 register and lot register chapter -wise, the statutory records prescribed under the law. However, the stock was physically verified by the officers only variety -wise and details were provided in the Annexure B. However, it is noticed that investigating officers have not given/mentioned the name of the record on the basis of which the physical stock was compared. I find that in absence of any documents mentioned in the - Annexure B, the stock physically verified by the officers cannot be compared. For this purpose, there should be indicated some relevant/statutory record on the basis of which stocks have been compared and shortage is arrived. In absence of such a record, no shortage can be attributable. On going through records, it is further found that in the SCN, the department has relied upon RG1 register for the F.Year 2002 -03 and 2003 -04 whereas the stock has not been either taken as per RG1 and chapter -wise. It is further seen that sample of kinkhab variety of fabrics were drawn while there is no physical stock of this variety in Annexure B to the SCN. I further find that clandestine removal has not been supported by any other evidence except the statements of Shri Jagdishbhai V. Patel, Manager of the respondent firm. Revenue has cited the judgment of Kerori Engg. Works v. CCE, Delhi -I - 2004 (166) E.L.T. 373 (Tri. -Delhi -I) and also CCE, Chandigarh v. Vimal Alloys Ltd. - 2004 (168) E.L.T. 343 (Tri. -Delhi). On going through the case laws, I find that in both the cases departmental officers found the shortage and the same was admitted by the party in their statements and no retraction was made. Further, the stocks were verified with statutory excise documents. I find that facts of these two cases are different from present one. In the present case the shortage is detected but no proper verification is done as discussed here -in -above and also document on the basis of which this shortage is made is not identified. I find that the respondent have relied on the case of Ishwarlal C. Surana v. Commr., Madras - 2003 (162) E.L.T. (Tri -Chennai), facts of which are applicable in the present circumstances. I find that Deptt. is not able to establish the evasion/illicit removal of fabrics. The CEGAT in the case of Premier Packaging Pvt. Ltd. v. Commr. of C. Excise, Kanpur - 2005 (184) E.L.T. 165 (Tri. -Delhi) has held that Clandestine removal - Evidence - Statement of Director and authorized signatory regarding receipt of raw material in a clandestine manner and manufacture of finished goods therefore, not a conclusive evidence in the absence of any other material, tangible evidence. In the case of CCE, Patna v. Universal Polyethylene Industries - 2001 (130) E.L.T. 228 (T) - held that Clandestine removal and clearance is a serious charge against manufacturer, which is required to be discharged by the revenue by production of sufficient and tangible evidence.