2013 (2) TMI 544 - AT - Central Excise

Difference between value of production and removal of goods in ER-1 returns and value of stock transfer recorded in the trial balance-sheets - Held that - The defence submission in respect of transfer of materials from KGF complex to Bangalore complex and use of the said material for manufacture of vehicles which were ultimately supplied to defence has not been made with clarity and precision. Now, an attempt is made before us that whatever was sent from KGF has been utilized in the Tatra vehicles and ultimately supplied to defence. For fresh consideration matter remand back to commissioner

Summary

Issues:
1. Discrepancy in values as per ER1 returns and stock transfer values for financial years 2003-04 and 2004-05.
2. Differential duty demand, interest, and penalty under Section 11AC imposed by the department.
3. Explanation provided by the appellants regarding inter-division transfers and utilization of materials for defence supply.
4. Commissioner's acceptance of explanation but partial rejection based on lack of evidence.
5. Lack of clarity and precision in defense submission regarding material transfer and utilization.
6. Decision to set aside the Commissioner's order, remand the matter for fresh consideration, and provide an opportunity for written submissions with supportive documents.

Analysis:
1. The department issued a show-cause notice based on the variance between ER1 values and stock transfer values for the financial years 2003-04 and 2004-05. A significant duty demand was proposed, along with interest and penalty under Section 11AC.

2. The appellants explained the inter-division transfers within their complex and the utilization of materials for further manufacture. The Commissioner accepted part of the explanation but raised concerns about the lack of evidence regarding the materials supplied to defense, leading to a confirmed demand and penalty.

3. The appellant's representative argued that further details were not requested by the Commissioner when unsatisfied with the explanation. They expressed confidence in providing additional clarification if given the opportunity.

4. The lack of documentary evidence supporting the claim that materials transferred from one complex were ultimately exported led to the duty demand. The defense submission lacked clarity and precision in establishing the link between material transfer, vehicle manufacture, and defense supply.

5. After careful consideration, the Tribunal decided to set aside the Commissioner's order confirming the demand and remanded the matter for fresh consideration. The appellants were instructed to submit written explanations with supporting documents within a specified timeframe for the Commissioner's reevaluation, emphasizing the need for a clear decision based on factual evidence.

6. The appeal was allowed by way of remand, and the stay petition was also disposed of, indicating a procedural resolution pending the fresh consideration of the case with additional evidence and clarity on the defense submission.