Customs, Excise and Gold Tribunal - Delhi
Bhushan Steel And Strips Ltd. vs C.C.E. on 3 December, 1999
Equivalent citations: 2000(116)ELT652(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. In this Appeal, Order-in-Appeal No. 379-98, dated 29-5-1998 passed by the Commissioner (Appeals), Central Excise, Ghaziabad is under challenge.
2. Ld. Counsel for appellants, Shri Rajesh Chibber submits that the matter relates to a duty demand of Rs. 6,28,147/- confirmed by the Commissioner (Appeals) in the impugned order.
3. The case of the Department is that on verification of stock by Officers of Central Excise on 18-5-1995 of finished goods, certain shortages and excesses were found. This was reflected in the Panchnama prepared after verification and to which the appellants' representative had subscribed to by putting his signature as token of acceptance of the figures shown in the Panchnama.
4. The appellants on the other hand contend that having regard to the huge volume of the finished goods (cold rolled steel sheets and coils) which ran into thousands of tonnes, actual stock verification was made by the Officers on assumption basis. The discrepancy alleged in the stock records maintained by the appellants was the result of the defective method adopted by the Officers. The Panchnama cannot also be considered to be a reliable document for arriving at the actual quantum of production in these circumstances.
5. Ld. Counsel in this connection specifically invited attention to the observations made by the Commissioner (Appeals) in his order wherein the Commissioner (Appeals) has himself expressed doubts about the correctness of the figures. For that reason, he had also reduced the quantum of penalty and dropped the confiscation of the goods. However, according to the ld. Counsel, in spite of giving a finding about the unreliability of the method of stock verification made by the Officers, Commissioner (Appeals) had chosen to confirm the duty demand against the appellants merely on the ground that the appellants had accepted the excesses and shortages recorded in the Panchnama by signing the Panchnama.
6. Ld. Counsel contended that each coil/packet of sheet contained a tag which gave details of the dimensions, variety etc. of the coils/sheets. It was therefore not impossible for the Officers to correctly account for the available stock and verify with the records. He draws attention to the fact that though there was no mention of arriving at the shortages/excesses on the basis of any average weight worked out at the time of verification, the Show Cause Notice had stated that "some of the coils/bundles of the stock" were physically weighed which were found tallying with the weights shown on the slip pasted on the coils/bundles. It had further stated that the verification showed certain shortages in respect of some varieties of the finished goods while excesses quantities were found in respect of some other variety, which had been tabulated in the SCN. The appellants had in reply to the SCN explained the reasons for the alleged shortages/excesses and contended that the difference if any on net average basis would be very negligible (below one percent) which was not abnormal in the steel industry where accepted tolerance was around four to five percent, plus or minus. Further, on the date of verification of stock, the total stock available with the appellants was ble for the Officers to weigh the entire s period of one day. On the other hand, a stock position as recorded on the Budget Departmental Officers. Reliance was plac in the statutory records for the subsequei duction prepared on that basis was enclo; ments clearly explained the alleged excessiround 7,465 M.Ts. It was not possi-ock by any method within a short pellants had laid emphasis on the ay which had been verified by the d on the stock position as reflected t period. Statements of stock /pro-id in reply to the SCN. These state's or deficit of stock. The statements had shown the correct position. However, the authorities below had not taken into consideration the said explanations and figures on the ground that they were mere afterthought. Ld. counsel contends that having regard to the aforesaid factual position, the appellants should have been given at least the benefit of doubt and the duty demand should not have been confirmed against the appellants. In this connection reliance is placed on the Tribunal Final Order No. A/469/1987-NRB, dated 12-8-1987 in which the Tribunal had given benefit of doubt to the assessee on more or less similar fact situation. In that case Preventive Officers had verified the stock (ingots) by measurement and by test check. This indicated that the Officers did not actually weigh the ingots to find out the weight. The formula adopted by them was also not made available to the assessee nor even to the Tribunal. In those circumstances the assessee's contention that the basis for alleging excess of goods was found to be not acceptable and benefit of doubt was given to the assessee.
7. Defending the order, ld. JDR, Shri Y.R. Kilania submitted that the appellants themselves have admitted to the shortages/excesses found at the time of verification of stocks by the Departmental Officers on the day of their visit to the appellants' factory. Appellants had also subscribed to the Panchnama prepared thereafter showing shortages and surplus of finished products. If the appellants had any misgivings about the method adopted for verification of stocks, it was upto them to point out the lapses or discrepancy at that time. Having failed to do so, the stand subsequently taken by the appellants in raising doubts about the process of verification was merely an afterthought and had been rightly rejected by the Authorities below. Further, the Commissioner (Appeals) himself had granted benefit of doubt to the appellants to a reasonable extent by reducing the quantum of penalty and by dropping the confiscation. Since the duty demand was based on the shortages/excesses accepted by the appellants themselves in the Panchnama, the impugned order does not call for any interference, submitted the ld. JDR. In support of his contention, he relied on the Tribunal decision in H & R Johnson (I) Ltd. v. CCE, Indore reported in 1994 (71) E.L.T. 589 (Tribunal) in which the Tribunal had upheld the duty demand and the penalty on the ground that the verification was done in the presence of the representatives of the assessee who had signed the relevant records of stock taking confirming excesses/shortages.
8. I have considered the submissions of both sides and have perused the records. I observe that the Commissioner (Appeals) has in paragraph five of the impugned order noted with approval the appellants' contention that the weighment made by the Officers at the time of verification was not free from doubt. However, on the ground the appellants had accepted the excesses and shortage of stock in their statement, the duty demanded by the Adjudicating Authority was upheld by the Commissioner (Appeals). It is seen that simultaneously, he had also reduced the penalty and set aside the order of confiscation of the goods allegedly found unaccounted. The Commissioner (Appeals) has thus on the one hand expressed doubts about the correctness of the method adopted by the Officers for arriving at the excesses/shortages and on that basis given the appellants the benefit of doubt as far as penalty and confiscation of goods are concerned. On the other hand, on the same set of facts he has sought to confirm the duty demand merely for the reason that the appellants have subscribed to the panchnama showing excesses/shortages. To this extent I agree with the appellants' plea that there is a contradiction in the view taken by the Commissioner (Appeals). Once the Commissioner had taken the view that the method of verification adopted by the Officers was not free from doubt and confiscation cannot be sustained on that basis and quantum of penalty has to be reduced, there was no justification for not applying the same logic for considering the duty demand also. Once the benefit of doubt is given to an assessee on the basis of the evidence produced before the Adjudicating/Appellate Authority, the said benefit of doubt has to be extended to all the issues requiring to be decided, namely, duty demand, confiscation of goods and imposition of penalty. It cannot be that for purpose of considering quantum of penalty and confiscation of goods the assessee can be given the benefit of doubt but the same can be denied when it comes to confirming the duty demand. The evidence, or lack of it, for coming to the conclusion about penal liability/confiscation would equally apply for deciding duty liability as well.
9. In the light of the above, I am of the view that the impugned order cannot sustain and has to be set aside. Accordingly, I allow the Appeal and set aside the impugned order with consequential benefits if any, to the appellants under law.