2015 (3) TMI 29 - AT - Central Excise

Waiver of predeposit of duty - Show cause notice dt. 5.8.2010 was issued to the appellant demanding Central Excise duty on the stock of finished goods as per the balance sheet when compared to ER-1 Returns which is not appropriated by them - Held that - Since the appellant has already debited the entire duty amount in dispute, they have made out a prima facie case for waiver of interest and penalty. Accordingly, the predeposit of interest and penalty is waived and its recovery is stayed till disposal of the appeal - Stay granted.

Summary

Issues:
Waiver of predeposit of duty of &8377; 37,67,339/- along with interest and penalty based on discrepancies in stock figures between balance sheet and ER-1 Returns for motor vehicle parts manufacturers.

Analysis:
The appellant, a manufacturer of motor vehicle parts, filed for waiver of predeposit of duty amounting to &8377; 37,67,339/- along with interest and penalty due to discrepancies in stock figures. A show cause notice was issued demanding Central Excise duty based on the stock of finished goods as per the balance sheet compared to ER-1 Returns. The adjudicating authority dropped the proceedings initiated in the show cause notice after examining the ER-1 returns and following principles of natural justice. However, the Revenue appealed against this decision before the Commissioner (Appeals), who set aside the original order and allowed the departmental appeal, leading to the current appeal before the Tribunal.

The appellant's consultant argued that the demand was raised based on audit objections, focusing on reconciling closing stock figures from the balance sheet with ER-1 Returns for the financial year 2008-09. He highlighted that the stock figures in ER-1 only included ready-to-despatch goods, while the balance sheet reflected total finished goods, including those not ready for dispatch. The difference in stock was explained with documentary evidence, clarifying that the stock from the balance sheet was later recorded as production stock in the next financial year, with no clandestine removal. The consultant emphasized that the lower authority dropped the proceedings after verifying the evidence, whereas the Commissioner (Appeals) exceeded the scope of the show cause notice by setting aside the original order. Additionally, the appellant had already paid the disputed duty amount through cenvat credit, as proposed for appropriation in the show cause notice and discussed in the original order.

In response, the Revenue's representative reiterated the findings of the original order. After hearing both sides, the Tribunal found that the appellant had debited the entire disputed duty amount, establishing a prima facie case for waiving interest and penalty. Consequently, the predeposit of interest and penalty was waived, and recovery stayed until the appeal's disposal, with the stay application being allowed.