2014 (5) TMI 1013 - AT - Central Excise

Duty demand - Shortage in stock - Assessee contends that since new ERP based Navision Software was installed for making entries, he was not aware of the discrepancy - Held that - It is seen that the appellant had recently started using ERP Based Navision Software. The main Server of the same was located in the head Office at 54/38, Nayaganj, Kanpur. The main feature of this Software is that it is to be connected through Broadband Network and subsequently the entries in the records were then made at the Unnao Unit at the end of the day. But sometimes, due to problem in services of BSNL connectivity to the Server was not available and it resulted into delay in feeding entries/data in the Computer. That at the time when inspection was conducted by the Department, due to server problem, the broadband could not be connected to the main server and hence the days entry could not be updated in the system of the applicant. - appellant representative has accepted the shortages only but nowhere accepted the fact of removal of the same. On the other hand, there is plausible explanation of the same. As such, I find no reasons to the upheld the confirmed demand against them - Decided in favour assessee.

Summary

Issues:
1. Shortages in raw materials leading to demand of duty and penalty imposition.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI involved a case where the appellant, engaged in manufacturing Adhesive and Resins, faced shortages in raw materials during a visit by officers, resulting in a demand of Rs. 2,35,612. The appellant, using ERP-based Navision Software, explained that connectivity issues with the main server caused delays in updating entries, leading to discrepancies in stock records. Despite the explanation, lower authorities confirmed the demand and penalty.

The appellant's reliance on the new software and server connectivity issues was not accepted by the lower authorities, solely focusing on the alleged shortages of raw materials. The Tribunal noted that the mere shortages did not conclusively prove clandestine removal, citing previous decisions. The appellant's representative admitted to shortages but denied removal, providing a plausible explanation for the discrepancies. Consequently, the Tribunal set aside the confirmed demand and penalties, allowing the appeal with relief for the appellant.