Custom, Excise & Service Tax Tribunal
Skipper Ltd vs Kolkata-Ii on 22 July, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal No. 75260 of 2016
(Arising out of Order-in-Original No.03/COMMR/CE/KOL-II/Adjn/2015-16 dated
16.12.2015 passed by Commissioner of Central Excise, Kolkata-II)
M/s. Skipper Limited,
(Uluberia, N. H.-6, P. O.- Mahisrekha, Howrah-711303)
Appellant
VERSUS
Commr. of Central Excise, Kolkata-II
(M. S. Building, Customs House, 15/1, Strand Road, Kolkata-700001 )
Respondent
APPEARANCE :
Mr. Kartik Kurmy & Ms. Ritika kurmy, both Advocate for the Appellant Shri S. Dey, Authorized Representative for the Respondent CORAM:
HON'BLE MR. R. MURALIDHAR, MEMBER (JUDICIAL) HON'BLE MR. RAJEEV TANDON, MEMBER (TECHNICAL) FINAL ORDER No.76983/2025 Date of Hearing : 25.06.2025 Date of Pronouncement : 22.07.2025 PER R. MURALIDHAR The Appellant is engaged in the manufacture of Power Transmission Lines, Towers and Pipes Ch. 72 and 73 of the Central Excise Act, 1944. A search of the factory of the Appellant was conducted on 27-11-2013 to 02-12-2013. In the course of search and seizure, physical stock of raw materials i.e. Blooms, Billets, HR Coil, Skelp, CR Strip was taken and 842.250 MT of Billets/Blooms and 145.586 MT of HR Coil/Skelp/CR Strip was found short. After verification of the documents like Goods Receipt Notes, Gate Entries etc. for the period 2010 to 2013, it was alleged that the appellant has not received the raw materials like M S Billets and C R Steel strips to the tune of 6119.97 MT. A Show Cause Notice was issued on 14.10.2014 demanding Rs.2,26,73,265 and Rs.39,92,678 on these counts. Before the Adjudicating authority the appellant refuted the allegations and submitted documentary evidence for having received and utilized the raw materials. The Adjudicating authority after due process confirmed the demand. Being aggrieved, the appellant is before the Tribunal.2
E/75260/2016-DB
2. The Ld Counsel appearing on behalf of the appellant makes the following submissions :
2.1 During the period under dispute i.e. 2010-11, 2011-12 and 2012-
13, the Appellant purchased following quantities of raw materials and received the same in their factory, accounted for the same in the inventory and books of accounts and made payments to the suppliers through proper banking channel.
Sl.No. Suppliers Items Qty. CENVAT
(in MT) Credit
1. M/s Ankit Metal & Power Ltd. M.S. 3515.57 1,18,60,928/-
(Regn.No.AAFCA5230BXM001) Billet
2. M/s Super Smelters Pvt. Ltd. M.S. 999.28 35,81,835/-
(Unit-III) Billet
(Regn.No.AAFCS1116FXM003)
3. M/s Braham Alloys P. Ltd. M.S. 666.72 15,47,158/-
(Regn.No.AACCB4367LXM001) Ingot
4. M/s Shri Bihariji Cold Rollers C.R. 938.4 56,83,344/-
P. Ltd. Steel
(Regn.No.AAFCS4734DXM001) Strips
TOTAL 6119.97 2,26,73,265/-
2.2 The impugned raw materials have been consumed by them in the manufacture of their finished goods on which duty of excise is paid at the time of clearance.
2.3 The impugned goods are received by the Appellant -
(i) under cover of Excise Invoices (Page 758 to 938, Page 986 to 1020, Page 1049 to 1104 and Page 1126 to 1165, Vol. - III),
(ii) Transporting Bills raised by Transporters for transport & Transport Ledger (Page 979 to 985, Page 1045 to 1048, Page 1121 to 1125, Vol.- III).
2.4 The payment made to Suppliers through proper Banking Channel which are reflected in Vendor's Ledger (Page 939 to 940, Page 958 to 3 E/75260/2016-DB 968, Page 1021 to 1025, 1032, Page 1043 to 1044, Page 1105 to 1107) & Bank Statement (Page 947-957, Page 969-978, Page 1025 - 1032, Page 1036-1042, Page 1108-1120, Vol.- III of Paper Book) 2.5. The vehicles which transported the impugned goods are all Heavy Motor Vehicles (Please see Page 440 - 757 Vol. - II of Paper Book).
2.6 The receipt of impugned raw materials are disclosed in the -
(i) Inventory Register (Page 435 to Page 439, Vol.-I);
(ii) monthly returns filed under Rule 7 of the CENVAT Credit Rules, 2004 (RG-23A-Part-I) (Page 125 - 133, Page 169 - 177, Page 214 - 221, Page 254 - 265, Page 312 - 315, Page 346 - 356, Page 400-407 of Vol.-I);
(iii) Entry Book of Duty Credit (RG-23A-Part-II) (Page 134-155, Page 178-198, Page 222-240, Page 260-297, Page 316-331, Page 357-385, Page 408-430 of Vol.-I);
(iv) ER-1 returns (Page 114, Page 157, Page 200, Page 243, Page 300, Page 334, Page 387 of Vol.-I).
2.7 The Appellant has filed Annual Financial Information Statement in Form ER-4 return for 2010-11, 2011-12, 2012-13 under Rule 12(2)(a) of the CENVAT Credit Rules, 2004 (Page 100-113 of Vol.-I) disclosing inventory of raw materials, freight paid on raw materials, details of CENVAT Credit claimed.
2.8 The EA-2000 Audit of the books of accounts of the Appellant was conducted by the department for the year 2010-11, 2011-12, 2012-13 vide letter dated 09-09-2011, dated 07-05-2012, dated 01-08-2012 and dated 17-05-2013 (Page 95, Page 96, Page 99, Page 97, Vol. - I) and no discrepancy was noticed/pointed as regards claim of CENVAT Credit on the impugned goods.
4E/75260/2016-DB 2.9 The CENVAT Credit is denied on unwarranted "inferences" and "supposition" that impugned inputs were not received as there was no mention of GRN No. or no Gate entry stamp or non-availability of gate report or weighment slip (Please see Para 5.5 of the impugned Order, Page 22).
2.10 It is submitted that the impugned goods are duly entered in RG- 23A-Part-I, RG-23A-Part-II which are authentic document to prove receipt of impugned inputs.
2.11 The GRN, Gate Entry Stamp, Gate Entry Report, Weighment Slip are not prescribed document under CENVAT Credit Rules, 2004, hence, non-maintenance thereof cannot discentile CENVAT Credit.
2.12 It is submitted that substantive benefit of CENVAT Credit cannot be denied for non-statutory violations and technical reasons.
2.13 The Appellant purchased impugned raw materials and received the same in their factory, accounted for the same in the inventory and books of accounts and made payments to the suppliers through proper banking channel.
2.14 All the suppliers are large scale manufacturers and registered under the Central Excise Act, 1944 and are paying duty on clearance of their manufactured excisable goods which is accepted by the department without any demur.
2.15 During the disputed period, they purchased & received 367437.764 MT of raw materials, out of which, receipt of 6119.970 MT is brought into question which constitutes negligible 1.66%. It is unreasonable to believe that such a large manufacturer they would have resorted to suppression of fact to the extent of 1.66% of its purchases.
5E/75260/2016-DB 2.16 No enquiry / investigation was conducted at the end of the suppliers M/s Ankit Metal & Power Ltd., M/s Super Smelters Ltd. (Unit- III), M/s Brahm Alloys P. Ltd. and M/s Shri Bihariji Cold Rollers P. Ltd.
2.17 It is not the department's case that the impugned goods were not dispatched from the factory of the suppliers and that the impugned goods were not duty paid [Modular Auto Ltd. Vs. CCE reported in 2018- VIL-541-MAD-ST].
2.18 It is also not the case of the department that the impugned goods not transported by the transporters.
2.19 It is also not the case of the department that the impugned goods were sold to some other parties by the Appellant.
2.20 It is also not the case of the department that the finished goods were manufactured by the Appellant without the impugned goods.
2.21 In the case of Veer-O-Metals Pvt. Ltd. vs. CCE reported in 2016(331) ELT 475 (Tri.-Bang.), it is held that GRN etc. are not prescribed document / records under CENVAT Credit and non- maintenance thereof does not prove non-receipt of goods .
2.22 In the case of Bhawani Press Metal & Body Building P. Ltd. Vs. CCE reported in 2019 (369) ELT 1656 (Tri.-Kolkata), it is held that Gate Register maintained by Security Guard is not a prescribed document in terms of CENVAT Credit Rules, 2004. Denial of Credit merely on the basis of non-recording of entries in the so-called gate register not justifiable. (Para 9, 10).
2.23 In the case of CCE Vs. Sethi Industrial Corp. reported in (2014) 309 ELT 159 (Tri.-Del.), it is held that inputs not reflected in private records would not disentile the assesse to avail credit. Substantive right of CENVAT Credit cannot be denied on an objections of technical nature (Para 4, 5).
6E/75260/2016-DB 2.24 In the case of Kobain Electronic P. Ltd. Vs. CCE reported in (2016) 343 ELT 545 (Tri.-Ahmd.), it is held that RG-23A-Part-I & RG-23A-Part- II are statutory records and the only authentic documents to establish receipt of inputs/capital goods.
2.25 Search & seizure in the factory of the Appellant was conducted on 27-11-2013 to 02-12-2013. In the course of search and seizure, physical stock of raw materials i.e. Blooms, Billets, HR Coil, Skelp, CR Strip was taken and 842.250 MT of Billets/Blooms and 145.586 MT of HR Coil/Skelp/CR Strip was found short. Excise Invoices for purchase and in-house GRN, weighment slip etc. prepared by the Appellant was verified.
2.26 The Appellant vide letter dated 23-12-2013 (Page 86, Vol.-I) did not accept the stock differences and explained the stock difference on the ground that it relates accumulated invisible losses.
2.27 In the instant case, except purported shortage, there is no evidence of clandestine removal of short found goods and flow back of funds etc. CENVAT Credit cannot be denied on account of purported shortage alone. The Appellant relies on the following cases-
CCE Vs. Nissan Thermoware P. Ltd. (2011) 266 ELT 45 (Guj.) (Para 7);
Sumangal Ispat Pvt. Ltd. Vs. CCE reported in 2024-VIL- 1418-CESTAT-KOL-CE (Para __).
2.28 During the period under dispute, the Appellant purchased 367437.764 MT of raw materials and consumed approximately 333256.490 MT of raw material. The purported total shortage of 987.836 MT constitutes just 0.26% of the total raw materials purchased and just 0.29% of the raw material consumed, which is just negligible and no adverse inference can be drawn when such large scale manufacturing process is invoked.
2.29 The Entire demand is barred by normal period of limitation. In the instant case the entire sets of facts are disclosed in the RG-23A-Part-I & RG-23A-Part-II, ER-4 return submitted with the department which were 7 E/75260/2016-DB scrutinized. Further, the books of accounts and statutory records have been regularly audited under EA-2000, hence, the entire sets of facts were in the knowledge of the department and there was no suppression of facts. The EA-2000 Audit of the books of accounts of the Appellant was conducted by the department for the year 2010-11, 2011-12, 2012-13 vide letter dated 0-09-2011, dated 07-05-2012 and dated 01- 08-2012 and no discrepancy was noticed/pointed as regards claim of CENVAT Credit on the impugned goods.
2.30 The Appellant relies on the following judgments-
Sara Bhai M. Chemicals Vs. CCE reported in 2005 (179) ELT 3(SC) (Para 27);
Vandana Global Ltd. Vs. CCE, reported in 2022 (12) TMI 450-CESTAT New Delhi (Para 15, 16, 17)
3. In view of the above submissions, the Ld Counsel prays that the impugned order may be set aside both on merits as well as on account of limitation.
4. The Ld A R representing the Revenue reiterates the detailed findings of the Adjudicating authority. He submits that the officials have conducted detailed investigation. It has been found that in several cases, the materials said to have been received from the four Vendors in question under their invoices, have not been entered in the Gate Entry Register, Goods Receipt Notes and in many cases, the weighment slips are missing. This shows that only the Invoices are being received without the actual receipt of the materials. Hence, he justifies the confirmed demand. He further states that the shortage found during the stock-taking has not been disputed for the method adopted therein by the appellant. Since, they are not in a position to account for the shortage of stock, he submits they are liable to pay the Cenvat availed by them on such stock. In view of these submissions, he prays that the appeal may be set aside
5. We have heard both the sides and perused the appeal papers submitted in three volumes and synopsis filed by the appellant.
8E/75260/2016-DB
6. We find that the main issue in this case on the allegation that the appellant has not received the raw materials under the Invoices, on which the Cenvat Credit has been claimed by the appellant. The allegation is on account of the following four Vendors :
Sl.No. Suppliers Items Qty. CENVAT
(in MT) Credit
1. M/s Ankit Metal & Power Ltd. M.S. 3515.57 1,18,60,928/-
(Regn.No.AAFCA5230BXM001) Billet
2. M/s Super Smelters Pvt. Ltd. M.S. 999.28 35,81,835/-
(Unit-III) Billet
(Regn.No.AAFCS1116FXM003)
3. M/s Braham Alloys P. Ltd. M.S. 666.72 15,47,158/-
(Regn.No.AACCB4367LXM001) Ingot
4. M/s Shri Bihariji Cold Rollers C.R. 938.4 56,83,344/-
P. Ltd. Steel
(Regn.No.AAFCS4734DXM001) Strips
TOTAL 6119.97 2,26,73,265/-
7. We have perused the documentary evidence placed before us by the appellant. We find the appellant has filed the entire bunch of Invoices raised by these parties and the account of the same in the statutory records. We find that the Invoices raised by these parties are accounted for in the RG 23 A Part I for the stocks received and in Part II for the Cenvat Credit taken. For the convenience of ready reference the Entries of one of the parties Brahm Alloys for the month of November 2011 is reproduced below :
9E/75260/2016-DB 10 E/75260/2016-DB
8. We find that the Invoices Numbers given in the RG 23 A Part I for stocks are matching with the details given in Part II for the Cenvat Credit taken.
11E/75260/2016-DB
9. Coming to the accounting of the receipt by way of Goods Receipt Notes, we have extracted some of such GRNs in respect of the above Vendors.
12E/75260/2016-DB 13 E/75260/2016-DB 14 E/75260/2016-DB
10. The above Good Receipt Notes pertain to the consignments received from Super Smelters and Ankit Metal. All the details like P O number, Item, Qty, Vehicle Numbers etc. are given, showing accounting of the goods received.
15E/75260/2016-DB
11. We have also gone through the Ledger Copies pertaining to these Vendors wherein the Invoices are accounted for and payment through banking channels are recorded. Some sample documents are reproduced below :
16E/75260/2016-DB
12. The Invoice towards the purchase along with value for the same has been reflected along with the payment through banking channels to the respective ledger of the Vendor is shown in the Ledger.
13. The inputs and output details for the Financial Year is required to be filed by the assessee under E R 4 Return. We find that the appellant has filed the Returns. The relevant portions are extracted below :
17E/75260/2016-DB 18 E/75260/2016-DB
14. From the above ER 4 filed by the appellant, it gets clarified that as per the statutory requirement, the appellants were filing the details of input raw materials received and the finished goods manufactured by them.
19E/75260/2016-DB
15. From the above documentary evidence, it gets clarified that the appellant is properly accounting for the materials received from these vendors in the statutory records like RG 23 A Part I, Part II and ER 4. The same are also recorded in the respective Vendor's ledger towards the receipt and payment made to them through banking channels. The Invoices are also recorded in the GRNs.
16. The allegation of non-receipt of the goods stems from the fact that the receipts are not properly reflected in the Goods Receipt Note, Gate Entry, Weighment Slips etc. We note these are the internal-private documents of the assessee and not documents specified under the statute. The appellant has also explained that they are ERP compliant unit, using the SAP software, which captures all the entries on a realtime basis. As per them, since they were in the initial stage of implementation of this system, some entries might not be fully reconciled. The appellant being a Public Ltd company, the payments made by them through the Banking channels could not have been made, unless there is proper backing by way of documents towards their receipt. We have also perused the ledger copies showing the receipt value and payments made to the Vendor.
17. The allegation is in respect of four vendors. As per the Table given towards the transactions with these vendors, the value of purchase would be to the tune of more than Rs.25 crores. No documentary evidence has been brought towards any cash transaction between the appellant and the vendors. No enquiry has been made from these Vendors about the alleged non-receipt of the goods despatched by them. If the Revenue alleges that the Cenvat has been taken on account of paper transaction, then the Vendors should have been made co-noticee and put to notice about this contravention, holding them responsible for such paper transactions. This has also not been made, since they are not made co-noticees in the SCN. The GRNs show the details of the Vehicles. No enquiry has been made with the vehicle owners about movement / non-movement of these vehicles. This shows that the entire proceedings have been undertaken with a lackadaisical approach without any proper back-up evidence, merely relying on non- entering of the inputs in some private records.
20E/75260/2016-DB
18. Now we take up a look at some of the cited case laws :
2015 (316) E.L.T. 374 (Guj.) COMMISSIONER Vs MOTABHAI IRON AND STEEL INDUSTRIES
19. From the findings recorded by the Tribunal, it is apparent that payment to M/s. Vasmin Corporation in respect of purchases was made through banking channels. Under the circumstances, the Tribunal has lightly held that the demand cannot be confirmed against the assessee. The Tribunal has further found that it is an undisputed fact that all the purchases were duly recorded in the statutory books of the assessee and the goods were also found to be entered in its statutory records. That the Department had not made any investigation at the unit of the assessee, which could have supported the findings of the adjudicating authority. None of the consignors of the goods have denied the clearance of goods to the assessee. There was no evidence on record to show that the records maintained by the assessee were not correct. The Tribunal, was accordingly, of the view that on the basis of statements of some transporters which were not corroborated by any material on record, a huge credit could not be disallowed. It is under these circumstances that the Tribunal has set aside the demands and the penalties imposed upon the assessee and the co-noticees.
20. In light of the findings of fact recorded by the Tribunal upon a detailed appreciation of the evidence on record, as discussed hereinabove, it is not possible to state that the conclusion arrived at by the Tribunal is in any manner perverse to the record of the case. On behalf of the appellant, nothing has been pointed out to indicate that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. The learned Counsel for the appellant is not in a position to point out any material to the contrary so as to dislodge the finding of facts recorded by the Tribunal. Under the circumstances, in absence of any perversity in the findings recorded by the Tribunal, the impugned order does not give rise to any question of law, much less, a substantial question of law so as to warrant interference.
2012 (282) E.L.T. 206 (Guj.) COMMISSIONER Vs DHANLAXMI TUBES & METAL INDUSTRIES 21 E/75260/2016-DB
5..............The statement of the partner of the assessee, Shri Umesh Shah, also indicates that it was the categorical case of the assessee that it had received central excise invoices issued by the dealers through the truck driver who brought the consignments to its premises. In fact, from the statement of Shri Heda, it is apparent that M/s. Pranav Metal Mart, Nadiad, had even shown receipts of copper consignments and entered such receipts in the RG 23D registers. Likewise, the assessee had also recorded receipts of the raw materials in RG 23A Part-I record.
7. As can be seen from the impugned order of the Tribunal, the Tribunal after appreciating the evidence on record has recorded that there is no evidence to reflect upon the fact that the inputs were not actually received by the assessee; there was no dispute that the LRs were issued by the transporter showing that the assessee is the consignee of the goods; the case of revenue was based on the goods registers maintained by the transporter which indicates the description of the goods as "miscellaneous". According to the Tribunal, this fact, by itself, could not be held to be sufficient for arriving at the conclusion that the inputs were never transported to the assessee's factory. The Tribunal found as a matter of fact that all documentary evidence on record supported the assessee's case about the receipt of inputs, whereas there was no independent corroborative evidence produced on record by the revenue in support of its case.
8. From the facts noted hereinabove, it is apparent that the Tribunal has appreciated the facts of the present case in proper perspective and upon appreciating the evidence on record, has as a matter of fact, recorded that except for the goods registers maintained by the transporter, there is no other evidence on record to indicate that the assessee has in fact not received the goods in question. In the circumstances, in the absence of any evidence to the contrary being pointed out on behalf of the revenue, the conclusion arrived at by the Tribunal being based upon findings of fact recorded by it upon proper appreciation of the evidence on record, cannot be said to be unreasonable or perverse.
9. For the foregoing reasons, there being no infirmity in the impugned order of the Tribunal, the same does not give rise to any question of law, as proposed or otherwise, much less a substantial question of law so as to warrant interference. The appeal is, accordingly, dismissed.
22E/75260/2016-DB 2016 (343) E.L.T. 545 (Tri. - Ahmd.) KOBAIN ELECTRONICS PVT. LTD.
Vs COMMISSIONER OF C. EX. & S.T., VAPI
2. Shri Anand Nainawati (Advocate) appearing on behalf of the appellant argued that out of total credit amount of Rs. 3 Lakh pertains to Cenvat credit taken on capital goods and the remaining pertains to credit taken on the inputs. That the issue involved was taking credit of capital goods and inputs in appellant's Unit III when the invoices were in the name of Unit Nos. I and II of the appellant. That in the original rounds of litigation it was discussed that for minor clerical mistakes Cenvat credit cannot be denied to the appellant. That the credit has been denied on the presumption that inputs and capital goods were never received in Unit No. III. It was his case that the entire credit is proposed to be denied on the ground that as per report of JRO, the capital goods/inputs were not received by the appellant. That copy of said report was never given to the appellant. It was also the case of the learned advocate that neither the audit report nor the show cause notice dated 4-1- 2008 raised an iota of evidence that the capital goods/inputs were not received by the appellant. That copies of RG-23 Parts I & II of inputs and capital goods were made available along with accounts maintained for consumption of raw material were made available to the department. It was his case that credit was correctly availed by the appellant.
4.................Appellant did produce copies of RG-23 Part I & II of the credit taking registers to establish that capital goods and inputs were received in the factory of the appellant. The details of the raw material consumption were also made available by the appellant. It is not coming out of the discussion of the adjudicating authority as to why the records maintained by the appellant are not acceptable. The statutory Cenvat credit taking records are the only authentic documents to establish that capital goods and inputs were received by the appellant, when manipulation of records or diversion of inputs/capital goods are not alleged in the show cause notice. Under the above facts and circumstances appellant has brought on record the fact of receipt and utilisation of capital goods and inputs in the factory premises of the appellant. Minor procedural lapses cannot be made the basis of denying the Cenvat credit when the name of other units of the appellant in the documents was also condoned. Extended period is also not invocable in this case.
5. In view of the above observations, appeal filed by the appellant is allowed.
23E/75260/2016-DB 2016 (331) E.L.T. 475 (Tri. - Bang.) VEER-O-METALS PVT. LTD.
Vs COMMISSIONER OF C. EX., BANGALORE-III
6. After considering the submissions made by both the sides, I find that the credit availed by the appellant in respect of 11 invoices stands denied on the sole ground that there are no corresponding GRNs and BIN cards. The appellants have explained that out of the huge number of invoices being received by them, such non-maintenance or non-availability of GRNs and BIN cards cannot be held to be leading to the conclusive findings of non- receipt of inputs. I find force in the above contention of the learned advocate. The Revenue has not made any enquiries from the sender of the inputs, as reflected in the invoice. The appellants have recorded the invoices, inputs along the available Cenvat credit in their statutory records. I also find force in the appellant's contention that in the absence of the inputs in question, corresponding final products could not have been manufactured by them. The non-availability of the said documents which are not even the prescribed documents in terms of the Cenvat Credit Rules and the purpose of which is only to show the receipt of the materials at the factory gate, cannot be held to be conclusive evidence so as to arrive at a finding of the non-receipt of the goods. In the absence of any corroborative evidence, I find no merits in the Revenue's stand. Accordingly, the impugned orders are set aside and the appeal is allowed with consequential relief to the appellant.
19. The above case laws clearly hold that the accounting of the goods in the statutory records would prevail over the private records, payments through banking channels have to be duly considered and the allegations of the Revenue should be backed with proper corroborative evidence. In all these cases, the positive documentary evidence brought in by the assessee cannot be negated. We find that to the factual matrix of the present case, the ratio laid down in the discussed case laws are squarely applicable.
20. In view of the foregoing discussions we set aside on merits the demand of Rs.2,26,73,265 on the allegation of non-receipt of the goods.
24E/75260/2016-DB
21. Coming to the shortage of 842.250 MT of Billets/Blooms and 143.586 MT of HR Coils/Skelp/CR Strips found short in physical stock taking, on which the duty of Rs.39,92,678/- has been confirmed, we find that the appellant has taken the objection about the method adopted for arriving at the shortage. It may not be possible for us to get into the depth the allegation and counter allegation from both the sides. However, we find force in the appellant's submission that during the period under question they have purchases to the tune of 367437.764 MT of raw materials and consumed approximately 333256.490 MT of raw material. This pointed out shortage of 987.836 MT constitutes to just 0.26% of the total raw materials purchased and therefore, no adverse inference can be drawn when such large scale manufacturing process is invoked. In case of shortage, it is an assumption that the same has been removed clandestinely. No evidence has been brought in by the Revenue that they have come across about selling of these goods clandestinely on cash basis to any buyer. This Bench, in the case of Sumangal Ispat Pvt Ltd Vs CCE & ST Durgapur, vide Final Order No.77207-77209/2024 dated 24.10.2024, has held as under :
11...........We find no valid reason for assuming the charge of clandestine removal merely on the factum of shortages noticed which have been attributed to lack of weighment facility and therefore the burning losses accounted on the basis of an assumed estimate. The department is required to establish its case with tangible information and data to lend support to the allegation of clandestine removal of raw material/finished goods. While shortages in physical stocks could be a starting point leading to the presumption of clandestine clearance it cannot conclusively establish the same. In the absence of any other valid proposition/evidence and the argument other than physical shortages for which too the appellant has made out meaningful expressions to account for, cannot be sustained.
22. In view of the foregoing, we set aside even the confirmed demand of Rs.39,92,678 on merits.25
E/75260/2016-DB
23. Coming to the arguments of the appellant on account of limitation, we find from the above extracts that the appellant has been recording the receipts in the RG 23 A Part I and Part II, they have been filing their ER 1 Returns. The non-receipt of the inputs alleged by the Revenue, would result in mis-match of the input vis-à-vis output. It is on record that the appellant has been filing the ER 4 Returns showing the record for the financial year towards the receipt and output details. It is also on record that multiple audits were carried out during the period [ September 2011, May 2012, August 2012, August 2012 and May 2013] and no issue was raised about non-receipt of the goods in respect of the four vendors in question. In such circumstances, we are unable to subscribe to the view of the Revenue that the appellant has suppressed with an intent to evade Duty. Since none of the factual details discussed point to any suppression on their part, we hold that the confirmation of demand towards the extended period is legally not sustainable.
Therefore, we set aside the same on account of time-bar.
24. To summarize :
(a) The entire demand is set aside on merits.
(b) The extended period demand is also aside on account of time bar.
25. The impugned order is thus set aside and Appeal stands allowed. The appellant would be eligible for consequential relief, if any, as per law.
(Pronounced in the open court on 22.07.2025)
Sd/- Sd/-
(Rajeev Tandon) (R. Muralidhar)
Member (Technical) Member (Judicial)
Pooja