P. Anjani Kumar ORDER
P. Anjani Kumar, Member (T)
1. Heard both sides and perused the records of the case. The issue involved is whether the demand of duty from the appellants on the issue of shortages, shrinkages, non accountal and non-receipt of goods from job workers etc. and as to whether the allegation is sustained by evidence so as to be legally valid.
2. Briefly stated the facts of the case are that department has conducted stock taking of the unit of the appellants, M/s. Eastern Silk Industries, an EOU unit, initially themselves and after wards with the help of officers of CSTRI officials. The department alleged that
(i). There was a shortage to be 2140.03 Kg in the stock of raw material (Duty demanded Rs. 5,94,928)
(ii). The appellants have imported silk fabric, in place of raw material, in 2002 and cleared in domestic market (Duty demanded Rs. 6,96,138)
(iii). Shortage of raw material in godown register (Duty demanded Rs. 8,65,739)
(iv). The appellants availed wastage over and above permissible limits (Duty demanded Rs. 14,84,941)
(v). The appellants did not receive back the waste from job workers (Duty demanded Rs. 2,49,983)
A show cause Notice dated 20.7.2004 was issued. Commissioner, vide impugned order No. 34/2005 dated 15-3-2005, confirmed the duty demanded and imposed a penalty of Rs. 40,00,000/- on the appellant-company and Rs. 10,00,000/- penalty was imposed on Shri U.B. Venkatesh, Managing Director of the appellant-company. Hence, these appeals.
3. Learned counsel for the appellants submits that the stock taking was conducted on actual as well as estimated basis; stock of some sections was taken by Excise officers and some by CSTRI officers; report was given after a month; CSTRI officials have confirmed during cross examination that they have taken stock of preparatory and weaving sections only and stock of other sections was taken by excise officers; the report cannot be termed to be by experts. He submits that shortage cannot be alleged on presumptions and assumptions; department did not produce any evidence for diversion of goods found short. He relied upon the following cases.
• Oudh Sugar Mills Ltd. vs. Union of India: 1978 (2) ELT (J 172) SC
• CCE, Faridabad-II vs. Equipment Conductors and Cables Ltd.: MANU/PH/2590/2018 : 2019 (367) ELT 247 (P & H)
• ITC Limited vs. CCE, Bangalore: MANU/CB/0129/2002 : 2002 (149) ELT 1116 (Tri.-Bang.)
• Laxmi Exports vs. CCE & ST, Indore: MANU/CE/0702/2017 : 2018 (364) ELT 509 (Tri. -Del.)
• CCE, Surat-II vs. Special Project Finance (I) P. Ltd.: MANU/CS/0238/2008 : 2008 (225) ELT 533 (Tri-Ahmed.) - affirmed by Supreme Court [2016 (341) ELT A220 (SC)].
3.1. He further submits that there are factual errors in the report;
(i). The report considered only 22 of 42 arms of the machines; balance 20 could hold around 90 kg;
(ii). Out of 3375 kg of yarn available in the weaving section only 2496.74 kg was considered; this difference accounts for 200 kg;
(iii). 375 kg of cut bits (amounting to 575 kg) were not considered.
(iv). In respect of finished goods, book stock of 56,752 Mtr was considered against physical stock of 57,870.60 Mtr; this difference accounts for 200 kg;
(v). The report though saying that grammage varied from 100 gm-220 gm took a median of range 140-145; had they taken average of 142.5 gm, 400 kg would have been accounted.
Therefore, the alleged short........