Full Judgment
2. Heard the learned D.R. on behalf of the Revenue. None appeared on behalf of the respondents in spite of issue of notice. It appears from the record that on 28.3.2007, the learned advocate on behalf of the respondents requested for adjournment for 2 weeks. Accordingly, the matter was adjourned to 2.4.2007. Today, when the matter was called none appeared on behalf of the respondents and, therefore, the appeals are taken up for hearing in their absence.
3. The relevant facts of the case, in brief, are that the respondents are engaged in the manufacture of wall tiles and floor tiles of different varieties falling under sub-heading No. 6906.10 of the Schedule to the Central Excise Tariff Act, 1985. On 19.11.1997 and 20.11.1997 the central excise officers conducted stock verification of the finished goods. There was of shortage and excess of the different varieties of finished goods than RG-1 record. The respondents paid duty in respect of the shortage of finished goods as found during stock verification. The respondents made a request for waiver of show cause notice. Hearing was granted on 16.4.1998 and the respondents appeared in personal hearing before the adjudicating authority. Thereafter on 4.5.1998 the respondent filed refund claim of Rs. 4,46,316/- on the ground that they have debited the amount on the shortage of finished goods and raw material by mistake of facts. By Order-in-original dated 19.5.1998, the Additional Commissioner of Central Excise confirmed the demand of duty in respect of shortage of finished goods and raw material, adjusted the amount of duty as deposited by them. He confiscated the excess quantity of finished goods and redemption fine of Rs. 50,000/- was imposed. He also imposed penalty upon the respondents. In view of the said adjudication order dated 19.5.1998, the Assistant Commissioner of Central Excise vide Order-in-original dated 31.7.1998 rejected the refund claim filed by the respondents. By Order-in-appeal No. 2-CE/IND-11/2005 dated 13.1.2005, the Commissioner (Appeals) modified the adjudication order dated 19.5.1998. The excess and shortage of finished goods were adjusted to arrive at net variation of finished goods. The Commissioner (Appeals) adjusted the excess quantity against shortage and thereby, there was no excess quantity of the finished goods. The Commissioner (Appeals) modified the demand of duty by adjustment of excess quantity and set aside the redemption fine. Further, by Order-in-appeal No. 3-CE/IND-11/2005 dated 13.1.2005 allowed the refund claimed filed by the respondents in view of the modification of the adjudication order dated 19.5.1998. The Revenue filed these appeals against the impugned orders.
4. The learned D.R. submits that the respondents were maintaining RG-1 record as per variety of finished goods and, therefore, adjustment of different variety against the shortage and excess is not permissible in law. He submits that the Commissioner (Appeals) had not assigned any proper reason for such adjustment.
6. It is revealed from the adjudication order dated 19.5.1998 that there were shortage and excess of wall tiles and floor tiles of different varieties in excess of RG-1 record. Thus, it appears from the adjudication order that the respondents were maintaining RG-1 record variety-wise of the finished goods. The Commissioner (Appeals) observed that keeping in view the volume and arduous nature of verification, it is always possible that while counting different varieties of tiles there are mistakes committed resulting in shortage in one variety and excess in some other variety and therefore, it deserves to be adjusted to arrive at net variation. It appears that the respondents had been maintaining RG-1 record of variety-wise and, therefore, the stock of the finished goods is liable to be ascertained variety-wise as per RG-1 record. The Commissioner (Appeals) made adjustment of shortage and excess on the presumption that there were mistakes in the stock taking which is not proper and appropriate. Accordingly, I do not find any merit in the findings of the Commissioner (Appeals). However, it is not clear from the impugned orders whether the respondents were maintaining stock of the finished goods of variety-wise in their RG-1 record.
Therefore, the impugned orders are set aside and the matters are remanded back to the Commissioner (Appeals) to examine it afresh in the light of the above direction and to pass an order in accordance with law.