2011 (1) TMI 586 - AT - Central Excise

Waiver of pre-deposit - Duty demand and penalty have arisen on the ground that there was a difference between the quantity of petroleum products cleared under bond without payment of duty through pipeline and that was shown by them in ER-1 return for manufacture and reconciliation statement vis- -vis AR-3A/Annual Account statement during the relevant period - the appellant gave detailed explanation regarding discrepancies in AR-3A, non-production of re-ware housing certificate, reconciliation certificate etc - IOCL failed to submit reconciliation statement showing AR-3A quantity vis- -vis ER-1 quantity which would have shown that there was actually no difference between the two quantities at all - He submitted detailed reconciliation statement for our perusal during hearing - Therefore, the appellant has made out a very strong prima facie case in their favour for waiver of pre-deposit - Both sides agree that the matter is required to be remanded to the original adjudicating authority for verification - Accordingly, the matter is remanded to the original adjudicating authority

Issues: Duty demand and penalty imposed on M/s IOCL due to discrepancies in quantity of petroleum products cleared under bond without payment of duty, issues related to correction in AR-3A and non-receipt of re-warehousing certificate.

Analysis:

1. Duty Demand and Penalty: The judgment confirmed a duty demand of 52,08,73,907/- with interest against M/s IOCL, along with a penalty of Rs.50 lakhs. The demand and penalty arose from discrepancies between the quantity of petroleum products cleared under bond without duty payment through a pipeline and the quantity reported in the ER-1 return for manufacture. The appellant argued that besides the discrepancy in ER-1 and AR-3A, there were other unresolved issues during adjudication, such as corrections in AR-3A and non-receipt of re-warehousing certificate. The appellant provided a detailed explanation for the discrepancies and submitted a reconciliation statement during the hearing. The appellant contended that the reconciliation statement showed no actual difference between the quantities reported in AR-3A and ER-1. The appellate tribunal found that the reconciliation statement had not been submitted or verified by the departmental authority during adjudication, leading to a strong prima facie case in favor of the appellant for waiving the pre-deposit.

2. Remand to Original Adjudicating Authority: Both parties agreed that the matter needed to be remanded to the original adjudicating authority for verification. The tribunal decided to remand the case to the original authority, instructing the appellant to submit all relevant details within thirty days. The original adjudicating authority was directed to verify the details, obtain clarification, and decide the issue afresh after providing a reasonable opportunity for the appellant to present their case. The decision to remand the case was based on the absence of the reconciliation statement during the initial adjudication process, highlighting the importance of verifying all relevant information before imposing duty demands and penalties.

In conclusion, the judgment addressed the duty demand and penalty imposed on M/s IOCL due to discrepancies in the quantity of petroleum products cleared under bond without payment of duty. It highlighted the need for thorough verification of reconciliation statements and other relevant details during adjudication to ensure a fair decision. The remand to the original adjudicating authority aimed to provide an opportunity for the appellant to present their case with all necessary information verified, emphasizing the importance of procedural fairness in tax matters.

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