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2008 (6) TMI 492 - AT - Central Excise
Issues involved:
Application for staying recovery of duty adjudged to be short paid by the appellants. Analysis: The case involved two applications for staying the recovery of duty adjudged to be short paid by the appellants. The appellants were engaged in manufacturing synthetic resin supplied to their sister unit for manufacturing paints. The value of the supply was determined as per provisions of Rule 6(b)(ii) on the cost of production, and provisional assessment was granted. Upon finalization of the cost of production, it was discovered that duty was paid in excess for some clearances, while there were shortages for others. Even after adjusting shortages against excess payment, the appellants were found to have paid excess duty. The appellants did not claim a refund for the excess payment as the duty incidence was passed on to their sister unit. However, the Revenue issued a show cause notice stating that the shortages could not be adjusted against the excess payment as it had already been passed on to customers. The issue was whether the excess duty paid could be adjusted against the shortage. The Tribunal noted that this was a case of provisional assessment where the duty short paid needed to be adjusted against the duty paid in excess, and only the differential duty, if any, was required to be paid. The Revenue's contention that the excess duty, already recovered from customers who took credit for it, could not be adjusted against the short payment was deemed incorrect. The Tribunal reasoned that since the duty short paid had not been recovered, once recovered, it would be passed on to the customer who could take credit for it, making the situation revenue-neutral. Therefore, the Tribunal found that the appellants had made out a prima facie case in their favor, warranting a complete waiver of the pre-deposit of duty and interest. Consequently, the Tribunal waived the pre-deposit of duty and interest and stayed the recovery thereof until the disposal of the appeals.
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