Clandestine removal - No satisfactory explanation given for substantial shortage-demand upheld.

PJ/Case Laws/2012-12/1018

Case: J.C. ROLLING MILLS PVT. LTD. V/S COMMISSIONER OF CENTRAL EXICSE, KANPUR

Citation: 2012 (276) E.L.T 254 (TRI. – DELHI)

Issue:- Clandestine removal – Substantial shortage not properly explained by assessee – Opportunity of hearing not availed - demand upheld.

Brief Facts:- The issue of undervaluation of stock raised while conducting the stock verification by the officer against appellant. The total shortage amounted to Rs 10, 76,916 which was considerably large and duty of Rs 1, 77,477 was made payable thereon. Assessee did not give the satisfactory answer regarding the shortage. Assessee appealed that there was no shortage of stock instead the resultant difference was due to the change in the method of valuation of stock. They have adopted weighted average method of stock valuation. They also contended that they did not received any show cause notice by the original authority. The contention was not considered as valid by the authority. The authority said that loss beyond 10% of the original stock would not be considered as normal wastage.

Appellant’s Contention:- Appellant contended that there was no shortage of stock instead the difference raised due to the adoption of the valuation method. They adopted average method for the valuation purpose. They also contended that they did not received any show cause notice from the certified authority.

Respondent’s Contention:- Revenue contended that assessee was liable to pay duty along with the interest and penalty. They also contended that the shortage was not due to normal loss as it was around 85%. The interest and penalty was as per Rule 11 and 25 of Central Excise Rules, 2002 justified.

Reasoning of Judgment:- The shortage was found approx of Rs 10,76,916 which was substantial and no satisfactory answer was given by appellant. The show cause noticed issued to the appellant was desperately ignored by assessee and thus remained unanswered. Seven times hearing notice was issued to the assessee. There was clear case of improper maintenance of accounts. Demand of duty along with interest is upheld. Penalty of Rs 1, 77,477 imposed under section 11AC is converted into a penalty under Rule 25 and the same is reduced to Rs 50,000.

Decision:- Appeal disposed off.

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PJ/Case Laws/2012-12/1018

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