2014 (5) TMI 977 - AT - Central Excise

Cenvat credit - Shortage in stock - manufacture of Polyster Film - Held that - entire case of the Revenue as regard shortage of Cenvatable inputs is based upon the inventory made by the appellant himself during the course of their internal stock taking. There is no allegation or evidence that the said inputs were either not received by the appellant or stands cleared by them without payment of duty. As such, such shortage in the stock conducted by the appellant themselves for the purposes of reconciliation of their entire stock cannot be made the basis for confirmation of demand of duty against them or for imposition of penalty. Accordingly, in the absence of any evidence to reflect upon clearance of such inputs, no demand can be made - Decided in favour of assessee.

Summary

Issues:
Shortage of inputs leading to demand confirmation and penalty imposition.

Analysis:
The case involved the appellant, engaged in manufacturing Polyster Film, availing Cenvat credit on duty paid inputs and Service Tax on input services. An audit objection revealed a shortage of inputs in the appellant's factory, leading to proceedings resulting in demand confirmation and penalty imposition. The original adjudicating authority's decision was upheld by the Commissioner (Appeals), prompting the present appeal.

During the proceedings, the Revenue relied on the appellant's internal stock taking inventory to establish the shortage of inputs. The appellant contested the shortage, providing a reconciliation statement to the Tribunal. The Revenue's case hinged on the appellant's inventory, with no evidence of non-receipt or clearance of inputs without duty payment. The Tribunal found no justification for confirming the demand or imposing a penalty based solely on the appellant's stock reconciliation, as there was no evidence of input clearance without duty payment. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief granted to the appellant.