2006 (2) TMI 412 - AT - Central Excise

Summary

Issues:
1. Appeal against irregular Cenvat credit availed.
2. Discrepancy in quantity of furnace oil received.
3. Method of determining excise duty liability.
4. Adoption of volume method over weight method.
5. Benefit of doubt in favor of assessee.

Analysis:
1. The appeal was filed against the Order-in-Appeal (OIA) which set aside the earlier order confirming irregular Cenvat credit availed by the assessee. The Commissioner had confirmed the irregular credit availed to the extent of Rs. 3,05,455/- along with penalties and interest under relevant sections of the Act.

2. The issue of discrepancy arose when a quantity of 219.452 Kilo litres of furnace oil was short received during a specific period, but Cenvat credit for this quantity was still availed. The Commissioner noted that furnace oil is sold based on volume and not weight. The department's attempt to change the procedure to weight basis was deemed unsustainable due to being time-barred.

3. The Commissioner highlighted that since furnace oil is bought and sold based on volume, and the excise duty liability is determined accordingly, it is appropriate to adopt the volume method over the weight method. The price paid by the appellant to the oil companies was also based on volume, further supporting the adoption of the volume method.

4. The Tribunal, after hearing both sides, upheld the Commissioner's findings as correct, legal, and proper. It was noted that no differences in quantities received were indicated by the department when the volume method was adopted. The principle of granting the benefit of doubt to the assessee when two methods are available, especially when one is beneficial to the assessee, was emphasized.

5. Ultimately, the Tribunal found no merit in the appeal and rejected the same, affirming the sustainability of the Commissioner's order both on the grounds of time-bar and merits. The decision was pronounced in open court at the conclusion of the hearing.