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The assessee attached a statement showing actual raw material received, quantity produced, actual goods sold and closing sock of the month of February and March 2005. The assessee submitted that their central excise records were not available with the assessee, since the same were lying with the Central Excise Department. However, when the month wise quantitative details prepared on the basis of book records maintained by the assessee, the quantity of 207.040 M. T. purchased in February 2005 was shown as produced and lying as closing stock of finished goods in February 2005 since the excise records were not available at the time of furnishing the month wise quantitative details to the Assessing Officer. Subsequently, on the insistence of the Assessing Officer, the assessee procured Xerox copies of the excise records from the Excise Department and submitted the same to the Assessing Officer in the last week of December, 2007. However, as it appears since the time available with the Assessing Officer was short, he did not call for further clarification and proceeded further with passing of the order with factually wrong figures, without giving any opportunity to the assessee to clarify the actual position with reference to the figures arrived by him. Since the Assessing Officer did not call for further clarification as the case was time bared, such anomalies remained. Therefore, it was submitted by the assessee that in the light of the submissions made above, the quantity of 504.075 M.T. is not liable to be considered for understatement of closing sock as on 31.03.2005. As far as the observations made by the Assessing Officer regarding the balance quantity of 570.380 M. T. of goods sent for processing before February 2005 but received after 31.03.2005 is concerned, the assessee submitted that this quantity of 570.380 M. T. which was sent for processing was wrongly punched by the accounts department in the column of scrap instead of raw material lying on hand. Hence, this quantity of 570.380 M. T. which was sent for processing was wrongly valued by the assessee as scrap at the value of Rs.10,000/ per MT instead of raw material lying with third party for processing as on 31.03.2005, which the Assessing Officer has rightly valued it as raw materials at Rs.78840 per MT. However, the value of quantity of 570.380 MT, wrongly included in scrap stock and valued at Rs.10,000/- per MT, be reduced from Rs.78,840 per MT and be accordingly valued at Rs.68,840 per MT. Hence, the assessee requested to treat only the quantity of 570.380 M. T. as under valuation of raw material in stock and may be valued as under:

The learned Counsel for the assessee by referring to the above submitted that the findings of the authorities below are, therefore, incorrect and liable to be set aside.

11. On the other hand, learned Departmental Representative relied upon orders of authorities below. The learned Departmental Representative submitted that excise record is correct. PB -122 is the copy of the excise record. Prior to that it was not in use because this paper says issued for use or in relation to the manufacture of final product. By referring the same paper, learned Departmental Representative submitted that first date therein is 2nd March, 2005 and was available to the assessee but the assessee produced the excise record at the fag end of assessment. The excise record would not verify purchases unless used for production. Excise do not verify about production of goods. They check an entry to be made when goods are moved out of the relevant zone. He has referred to page 18 of the assessment order and submitted that the findings of the Assessing Officer are correct. PB - 118 is the quantitative details of closing stock by the auditor. But the Excise Department did not verify purchases of the production. PB -120 is the quantitative details of closing stock. But Excise Department did not check. He has submitted that Assessing Officer has specifically noted that in the year under consideration assessee has shown gross profit margin at 6.8% as compared to 14.7% which would show that valuation of the closing stock was not correct. It would also show purchases came to factory of the assessee but sold outside the books or used somewhere. Some purchases of March, 2005 not entered in but received in April 2005. RG -23A register would show goods entered in bonded area but it is not clear who will verify the same. The chit would prove the case of the Assessing Officer. Assessing Officer did not doubt purchases but availability of the raw material was seen for the purpose of production. Learned Departmental Representative also filed written submission explaining therein that the department's case is largely dependent on the proof that certain material was there in stock as per excise record after 01-03-2005. Learned Departmental Representative explained that when assessee claimed that raw material purchased in January and February, 2005 were utilised for production is not possible because the goods were actually received at the Port and cleared by Customs in March, 2005. The assessee is not challenging the quantity of finished goods and scrap. No benefit of enhanced closing stock should be given to the assessee in the next year. The difference in closing stock as proved by the Assessing Officer is due to quantity of raw material taken less. The part difference accepted by the Assessing Officer would prove that there was excess raw material in closing stock over and above what was shown by the assessee. Learned Departmental Representative accordingly submitted that appeal of the assessee may be dismissed.

12.2 The assessee has filed month wise quantitative details of closing stock for the year ended 31st March, 2005 at page 120 of the Paper Book showing the closing stock at 298630.00 (298.360 MT).

Further details in this quantitative details are noted as under:

Stock of raw material as on 1-03-2005 54.923 MT (PB-120) Add:

Purchases made during March, 2005 as per purchase book (details PB -135 to 140) 994.620 MT (PB-120) Total 1049.543 MT Less:

-126 to 140 are the details of purchase register. PB/WS -15 and 16 are chart A and B would prove the above statements regarding material entered in purchases by the assessee prior to March but taken in excise record in March due to modvat canvet. The learned Counsel for the assessee also demonstrated that bills, custom clearance and chits on record would prove the above facts and on verification of the same we found the above statements to be correct and tally with the statements of the assessee filed at PB-121 with chart A and B above. It would prove that the assessee purchased goods in advance and were consumed in March,2005 for manufacture of final products. The Learned Departmental Representative also did not dispute the excise record as is also not disputed by the Assessing Officer. We accordingly, note that the Assessing Officer while recasting the closing stock of the raw material has taken into consideration the receipts shown by the assessee of the raw materials in the month of March,2005 in excise register to be the purchases of raw material by the assessee during the month of March,2005 which fact is incorrect. The Assessing Officer accordingly increased the purchases of the raw material of March, 2005 by 504.07 MT, despite the fact the same purchases have been duly accounted for as purchases in the months of January and February, 2005 (PB-121). The figures given at PB - 118 and 119 are of opening stock, purchases, consumption, sales and closing stock certified by the auditor. PB -120 is the quantitative details month wise as noted above and PB-121 is the statement showing quantity of raw material purchased before 1st March, 2005 in books but taken in excise record in the month of March,2005 and as such the Assessing Officer has inadvertently taken as purchases of March,2005. In excise register it is noted that raw material of 504.075 MT was shown as receipt in the month of March, 2005 but in the purchase register the same material is shown as purchased in January and February, 2005. Same material is consumed in March, 2005 as per the excise register. If the Assessing Officer wanted to increase the purchase for the month of March, 2005 by 504.075 MT, he should have also increased the consumption for this month by 504.075 MT. If the consumption is also increased to the above figure, the effect will be that the difference worked out by the Assessing Officer should be reduced. We agree with submission of learned Counsel for the assessee that according to Rule 57 A (4) of the Excise Rules, the assessee has shown the receipt of raw material when he claimed credit of modvat/canvet i.e. only at the time of consumption of the raw material. It is also done so that the consumption of the raw material may be matched with the receipt of the material and the assessee may not be able to claim double credit under the excise rules. The difference as worked out by the Assessing Officer by 504.075 MT is therefore, stands explained and shall have to be reduced.