Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/Case Law /2016-17/3318

Demand on shortage of finished goods.

Case:- MAHENDRA STEEL INDUSTRIES VERSUS COMMISSIONER OF C. EX. & S.T., JAIPUR-I
 
Citation:- 2016 (339) E.L.T. 623 (Tri. - Del.)
 
Issue:- Demand on shortage of finished goods.
 
Brief facts:-The present appeal is against order dated 10-10-2014 of Commissioner (Appeals)-I, Jaipur. The appellants are engaged in the manufacture of M.S. Bars liable to central excise duty. In November, 2012, the officers conducted certain physical verification of stock and found that there was a shortage of 45 MT. of M.S. Bars with reference to 290.597 MT. of recorded stock. Proceedings were initiated against the appellant. The Original Authority confirmed duty of Rs. 2,01,901/- and imposed penalty of equal amount on the appellant. On appeal, the Commissioner (Appeals) vide the impugned order upheld the original order. The present appeal is against this order.
 
Appellant’s contention:- Ld. Counsel for the appellant submitted that thewhole case against the appellant is on the basis of alleged shortage found of finished goods. The whole stock taking of around 250 MT was supposed to have been done in 2 hours i.e. between 1600 hrs to 1800 hrs on 23-11-2012 as is evident from the Panchnama drawn to evidence such weighment. Ld. Counsel pleaded that it is not physically possible to weigh such quantity and arrive at the shortage of 45 MT within two hours. Apparently, a rough estimate has been made by the officers. In such circumstances, a shortage arrived at and the statement given admitting such shortage cannot be the basis for demanding any central excise duty. Even if it is considered that there is some shortage of finished goods, in the absence of any corroboration, a clandestine removal cannot be confirmed. Ld. Counsel also relied on certain decided cases in support of her plea.
 
Respondent’s contention:- Ld. AR supported the findings of the lowerauthorities and stated that non-availability of finished goods has to be explained by the appellant which they have failed to do. The physical shortage supported by the statement of Shri Gupta, partner of the appellant-firm makes it a clear case of clandestine clearance.
 
Reasoning of judgment:- They find that the case mainly rests on allegedshortage of finished products during physical verification. The total quantity should have been 290.597 as per the records maintained by the appellant. On physical verification, the stock was found to be 245.597 MT resulting in a shortage of 45 MT. It is a fact that the Panchnama is very brief and did not contain details of how the weighment was carried out especially considering the weighment on physical verification was arrived at upto a kilogram level. Further, the whole process of weighing about 250 MTs of M.S. bars is shown to have been completed in two hours. This raises serious question about the correctness and methodology adopted for arriving at physical stock of finished goods. The whole case is built up on such shortage. There is no other corroboration regarding clandestine manufacture or clearance or transportation of goods or receipt of sale proceeds. While such clandestine activities need not be proved stage by stage with precision, it is necessary to have a clear preponderance of probability which will shift the burden to the assessee to defend his case against non-payment of duty. Here, the very basis of shortage is doubted and as such, any admission of such shortage is of no relevance in the absence of any corroboration. Further, they find that the ld. Commissioner (Appeals) held that the admitted fact need not be proved again. It is not clear as to what type of fact has been admitted. Even if Shri Gupta, partner of the appellant firm, has accepted the manner of stock taking and admitted the shortage of 45 MTS, in view of non-availability of very basis of stock taking and physical impossibility of going through the process of weighment of about 250 MTs of M.S. Bars within 2 hours and also arriving at the physical stock upto Kg. level without explaining how measurement was made creates serious lacunae and seriously affected the very basis of revenue’s allegation. The Tribunal in Raj Ratan Industries Ltd. - 2013 (292) E.L.T. 123 (Tri.-Del.) held that the allegation of clandestine removal in such type of cases are to be established by production of concrete and tangible evidence. In the said case also, the appellant admitted the stock taking and agreed to pay the excise duty. Later, it was found that the stock taking was not done on actual basis.
Considering the above analysis and facts of thepresent appeal, they find that the case of clandestine removal cannot be sustained against the appellant in view of the reasons discussed above. As such, the impugned order is set aside and the appeal is allowed.
 
Decision:- Appeal allowed
 
Comment:-The analogy of the case is that the allegation of clandestine removal cannot be leveled merely on the basis of Shortage of finished goods on basis of physical verification. Weighment of entire stock of around 250 MTs of M.S. Bars supposed to have been done within 2 hours and physical stock up to kg. level arrived at without explaining how measurement was made. There is no corroboration regarding clandestine manufacture or clearance or transportation of goods or receipt of sale proceeds. In this case clandestine removal not being proved, hence demand is not sustainable.
 
Prepared by:- Monika Tak

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com