The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the excise duty demands towards the shortage found during the stock taking is legally not sustainable.
The bench of R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) has observed that the verification report is not corroborated by way of supporting documents like weighing slip, quantification method adopted etc. As the appellant has submitted, in some cases, the stock taking process could not have been completed in the short time said to have been taken to arrive at the actual quantity of stocks.
The appellant/assessee is engaged in the manufacture of Cable Trays and parts and accessories falling under Chapter 85 of the CET, clearing the same to buyers like BHEL, Thermax, Jindal Steel & Power etc. The DGCEI officials visited the office, factory and residential premises of the appellants on 18.07.2008.
On physical verification of stock, it was also found that there were shortage of finished goods like Perforated Cable Tray, Ladder Type Cable Tray and G. I. Flat to the extent of 204.5 Mtr, 232.5 Mtr and 30.88 Mt respectively.
Similar shortages were also detected in respect of the Second Appellant also. Statements were recorded from the Director Sri Daga on 18.07.2008, 04.01.2011 and 12.01.2011. A common show cause notice was issued on 28.03.2011 upon all the assessees-notices, alleging that they have indulged in suppression of material facts by clandestinely removing finished goods from 01.01.2008 to 15.07.2008.
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In respect of the first appellant demand of Rs.93,22,667/- was made on account of clandestine removal and another Rs. 2,19,448/- was demanded towards the shortage of stock.
The assessee contended that Stock taking report did not bear the signature of any witness, which is in total violation of Sections 12F and 18 of the Central Excise Act read with Section 100 of the Code of Criminal Procedure, 1973. More than 1000 Mtrs of various types of Cable Tray had been weighed within a span of few hours on18.07.2008, which was a physical impossibility.
The assessee argued that the record of physical stock was not backed up by any proper backing like procedure adopted for stock verification like weighment slip, quantification process etc. Even during the Adjudication process, the Adjudicating authority did not seek documentary evidence from the Revenue for their allegations towards the shortages. Therefore, the physical shortage of stock has not been properly established.
The CESTAT while allowing the appeal held that the details of the method adopted to quantify the stocks is not to be seen from the Revenue’s investigation.
Case Title: M/s. Premier Power Products (CAL) Pvt. Ltd. Versus Commr. of Central Excise, Haldia Commissionerate
Case No.: Excise Appeal No. 70222 of 2013
Date: 04/09/2024
Counsel For Appellant: Indranil Banerjee
Counsel For Respondent: P. K. Ghosh
