2014 (7) TMI 484 - AT - Central Excise

Registered dealer - demand on account of excess sale of certain steel products from BSO, Bhilai as compared to the quantity of those products received from the respective steel plant - difference in stock on physical verification - Interest u/s 11AB - CENVAT Credit - Held that - The entire case of the department against the appellant is based on the stock taking records at the BSO, Bhilai which mentioned excess receipt in respect of certain steel products received from certain steel plants i.e. in respect of certain steel products received from certain steel plants, the quantity sold as per the records of the stockyard is more than the quantity received from the steel plant. But this difference can be due to various reasons like difference in weighing scales and product mix up and just from this difference, it cannot be presumed that the concerned steel plants had cleared the alleged excess quantity without payment of duty. - Order not sustainable - Decided in favour of assessee.

Summary

Issues: Duty demands confirmed against multiple steel plants based on stock taking records at a Branch Sales Office (BSO) - Excess sale of certain steel products compared to quantity received - Applicability of penalty and interest under Central Excise Act, 1944.

Analysis:
1. Duty Demands and Stock Taking Records: The case involved duty demands totaling &8377; 56,48,644/-, &8377; 10,37,485/-, &8377; 3,59,124/-, and &8377; 9,48,691/- against different steel plants based on stock taking at a Branch Sales Office (BSO). The BSO detected excess sale of certain steel products compared to the quantity received from the steel plants, leading to demands under proviso to Section 11 A(1) of the Central Excise Act, 1944.

2. Appellant's Argument: The appellant, a Public Sector Undertaking, argued that the discrepancies in the quantity of products received and sold could be due to reasons like differences in weigh bridges and product mix-up. They contended that the alleged excesses and shortages were not real, and adjusting these quantities would result in a negligible net excess. They further disputed the applicability of interest under Section 11 AB, highlighting the timeline of the demand period and the introduction of Section 11 AB.

3. Department's Defense: The Departmental Representative defended the duty demands, supporting the findings of the Commissioner in the impugned order based on the stock taking records at the BSO.

4. Judgment: The judges analyzed the contentions and evidence presented. They noted that the duty demands were solely based on the stock taking records at the BSO, which indicated excess sale of certain products. However, the judges found merit in the appellant's argument that discrepancies could be attributed to factors like differences in weighing scales and product mix-up. They emphasized that the mere difference in quantities sold and received does not conclusively prove duty evasion by the steel plants. Consequently, the impugned order was deemed unsustainable and set aside, leading to the allowance of the appeal.

This detailed judgment analysis highlights the core issues related to duty demands against multiple steel plants, the discrepancies in stock taking records, and the legal arguments regarding penalty, interest, and the sustainability of the impugned order under the Central Excise Act, 1944.