C.C.E. Meerut-Ii vs M/S Siddhant Chemicals

[Arising out of Order-In-Appeal No. 205-CE/MRT-II/2009 dated: 30.06.09 passed by CCE Meerut-II]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

C.C.E. Meerut-II ...Appellant

Vs.

M/s Siddhant Chemicals Respondent

Appearance:

Mr. G R Singh, DR for the Appellant

Mr. Rajesh Chibber, Advocate for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing. 03.06.2015

FINAL ORDER NO. 53080/2015

Per S. K. Mohanty:

The Revenue is in appeal against the impugned order dated 30.06.2009 passed by the Commissioner (Appeals), Meerut-II. The facts of the case are that during the course of verification of stocks of finished goods and raw materials by the Central Excise officials in the factory of the respondent, it was detected that some of the goods were found in excess/ short as compared to the stock particulars entered in the statutory records. As a result of such investigations, Show Cause Notice was issued to the Respondent, which culminated in the Adjudication Order dated 31.10.2008, wherein Central Excise duty of Rs. 7,25,405/- on shortage quantity of Menthol 97% and Rs. 8,14,218/- on the shortage quantity of DMO 20% were confirmed and equal amount of penalty imposed on the Respondent. In appeal against the said order, the Ld .Commissioner (Appeals) has set aside the duty demand confirmed in the Adjudication order and also reduced the quantum of penalty. The reason assigned for setting aside the duty demand is that no credible evidence has been brought on record by the Revenue to prove that the goods have been clandestinely removed from the factory. Further, it has also been held in the impugned order that the method of stock taking adopted by the Central Excise Officers is not proper and justified. Against the impugned order, the Revenue has filed appeal before this Tribunal.

2. In the grounds of appeal, annexed to the appeal memorandum, the Revenue has contested the impugned order on the ground that no stock of Menthol 97% and DMO 20% were available on the date of visit by the officers of the Department and as such the duty demand on account of such shortage quantity is required to be paid by the Respondent. The revenue further contended that there was not stock of disputed goods in process on the date of stock taking i.e. on 04.01.2006, and thus, the observations of the Commissioner (Appeals) that such stock position was not considered by the Department is factually incorrect.

3. I have heard the Ld. Counsels for both the sides and perused the records.

4. I find that after proper analysis of the entire case matter, the Commissioner (Appeals) has passed a reasoned and speaking order holding that the method of verification of stock by the Central Excise Officers was not proper and since the stock in process was not actually verified and the quantity declared by the proprietor of the Respondent company as stock in process was accepted by the officers of the Department, the duty liability cannot be fastened against the Respondent in absence of any plausible evidence that the goods have been removed from the factory. I also find from the grounds of appeal, that the findings of the Commissioner (Appeals) have not been contested especially by producing evidence that the Department has carried out the investigation and verified the records of the Respondent by themselves, and upon proper verification, the shortage quantity of the disputed goods were detected. Since, the duty demand in the Adjudication Order has been confirmed solely based on the statement of the proprietor who admitted that the stocks of the disputed goods were 25 Ton approximately and no proper accounts were maintained, the demand cannot be confirmed for mere non-maintenance of records and more particularly, in absence of any proof regarding clandestine removal of such goods.

5. Therefore, in absence of any specific allegation, with adequate evidence regarding clandestine removal of the goods from the factory, duty liability on account of mere non-maintenance of proper records cannot be the defensible ground for confirmation of the duty demand. Non-maintenance of proper records may expose the assessee to the penal consequences, which in the present case has been rightly upheld in the impugned order. .

6. In view of the above, I do not find any infirmity in the impugned order and accordingly, the appeal filed by the Revenue appellant is dismissed.

(Dictated and pronounced in open court)

(S.K. Mohanty)

Member(Judicial)

Neha