Delhi CESTAT while hearing the appeal of M/s G.P. Ispat Pvt. Limited against the CCE&ST, tribunal quashed the demand since the allegation of clandestine removal has been made only on the basis of alleged shortages noticed during stock verification.
During the period under consideration, the Central Excise Officers carried an inspection of the stock of inputs as well as finished goods in the factory of appellant; wherein carried the business of manufacturing iron and steel products. He eventually, alleged that the shortage of brand TMT bars were cleared clandestinely without payment of duty. Accordingly central excise duty was raised and upheld by the lower authority.
On second physical stock verification at the appellant factory with the same party along with CBI also found clearances of various quantity of scrap without payment of duty. The duty involved was confirmed in the impugned order pertaining to this show cause notice. Now the matter travelled to the Appellate Tribunal for further conclusion.
The bench comprising Justice (Dr.) Satish Chandra, President and V. Padmanabhan, Member (Technical) heard the contention of revenue that both verification of have been conducted in the presence of the representative of the appellant who has expressed satisfaction in the method adopted for such verification.
The revenue also added that if the appellant is failed to provide explanation for the above mentioned allegation then the appellant will liable to pay the excise duty.
Tribunal bench heard both the parties’ recital and perused the record and noted that “No attempt has been made to corroborate such figures of shortage with other factors such as consumption of power, procurement of raw materials and identifying possible buyers and transporters of such goods. Without any corroborative evidence, it is difficult to sustain the allegation of clandestine clearance”.
Also tribunal bench held that the present case is a well settled allegation of clandestine removal of finished goods cannot be sustained only on the basis of mere shortage. In support of this conclusion bench pressed the decision of High Court in the case of CCE&ST, Ludhiana vs. Anand Founders & Engineers wherein it has been held that mere shortages detected at the time of visit of the officers cannot ipso facto lead to the allegations and findings of clandestine removal.
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