2013 (5) TMI 514 - AT - Central Excise

Demand of differential duty differential quantity of sulphuric acid - difference in the particulars shown in the balance sheet and excise records Held that - There is a difference of quantity of 2844.445 MTs between the figures of Central Excise records and balance sheet. We also note that in the opening balance of 1998-99, the opening stock of Sulphuric Acid is 3685.115 MTs. As explained by the appellant, this consists of 2844.445 MTs of the differential quantity for the year 1997-98 plus a balance of 840.710 MTs as shown in the RG.I account. Therefore, the closing balance in the 1997-98 and the opening balance in 1998-99 tallies. We agree with this submission of the appellant and take a view that the shortage of a quantity of 2844.445 MTs for the financial year 1997-98 has been taken into account in balance sheet in the subsequent year 1998-99. Thus, the impugned order is set aside and appeal is allowed.

Summary

Issues: Discrepancy in quantity of Sulphuric Acid between balance sheet and excise records; Demand of duty on the differential quantity; Appeal against the order demanding duty.

Analysis:
1. The appeal was filed by M/s Asian Fertilizers Ltd regarding a discrepancy in the quantity of Sulphuric Acid between the balance sheet and excise records. The Central Excise officers found a difference of 2844.445 MTs in the figures for the year 1997-98. A show cause notice was issued demanding duty on this differential quantity, which was confirmed by the Additional Commissioner of Central Excise. The appellant then appealed to the Commissioner (Appeals) who rejected their appeal, leading to the current appeal before the Tribunal.

2. The appellant argued that the difference in quantity arose because they transferred 19,162.767 MTs of Sulphuric Acid to their fertilizer plant for manufacturing, out of which only 16,318.322 MTs was consumed due to factory closure, leaving 2844.445 MTs unutilized. The appellant contended that this unutilized quantity was reflected in the balance sheet of the subsequent year, 1998-99, thereby justifying the shortage in the previous year. The advocate emphasized that the demand for duty on the differential quantity was not valid.

3. On the other hand, the Revenue, represented by the DR, supported the lower authorities' findings and maintained that duty was correctly demanded due to the discrepancy in quantity between the balance sheet and excise records.

4. The Tribunal, after considering the arguments, observed the reconciliation of the quantity difference. They noted that the opening balance of Sulphuric Acid in the subsequent year, 1998-99, accounted for the unutilized quantity of 2844.445 MTs from the previous year, along with the balance in the RG.I account. Consequently, the closing balance of the previous year and the opening balance of the subsequent year aligned. The Tribunal agreed with the appellant's explanation and set aside the impugned order, allowing the appeal in favor of the appellants.