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On the basis of our examination of inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies between the physical stocks and the book stocks as revealed by the physical verification is considered to be material and accordingly, an amount of Rs.29,10,650/- (net debit) has been properly adjusted in the books of account.

4. In the said show cause notice, the Department also stated that it was evident that there had been shortage of raw materials and components, intermediate and finished goods in the assessee's factory. Thus, it was alleged that the assessee had failed to inform the Department about the shortage with a clear intention to evade payment of excise duty and invoking the extended period of limitation under the Proviso to Section 11A(1) of the Central Excise Act, 1944 (for brevity, the Act), the said notice was issued calling upon the assessee to show cause as to why duty of Rs.81,058/- should not be demanded, as to why the CENVAT credit availed on the raw materials and components found short should not be recovered, as to why appropriate interest should not be demanded and as to why penalty should not be levied.