2008 (2) TMI 752 - AT - Central Excise

Summary

Issues involved: Interpretation of duty credit reversal for procured oxygen, application of accounting principles for inventory management.

Interpretation of duty credit reversal for procured oxygen: The appellants manufactured and procured oxygen, stored in a common tank for supply. Dispute arose regarding the duty credit reversal for duty-free supplies related to procured oxygen. Appellants claimed credit reversal only for supply exceeding their own production. However, the demand required reversal of entire credit for procured quantity supplied duty-free. Tribunal noted the common tank usage and directed application of first-in first-out principle for credit quantification. Impugned order set aside, matter remanded for redetermination of duty amount based on this principle.

Application of accounting principles for inventory management: Appellants permitted to store oxygen from both sources in a common tank. Manager confirmed first-in first-out principle applied for common inventories. Tribunal deemed this principle acceptable for quantifying credit reversal. Directed original authority to redetermine duty amount using this principle, granting appellants a hearing opportunity. Appellants allowed to raise time-bar grounds. Appeal allowed for remand in specified terms, cross-objection disposed of accordingly.