2015 (3) TMI 125 - AT - Central Excise

Penalty u/s 11AC - shortages/adjustments recorded in the ER-1 return - Held that - Entire issue relates to demand of duty on the shortages/adjustments recorded in the ER-1 return for the month of May, 2011 by the Appellant themselves. It is the claim of the Appellant that prior to levy of excise duty, shortages in the stock of Coal was noticed by their vigilance team and it continued till April, 2011.On the basis of second stock verification by their vigilance team, the final shortage figure was confirmed to be 11.76 lakh M.T. which they have adjusted in their books of accounts and reported accordingly in their ER-1 return. We find from the records that the Ld.Commissioner has arrived at a conclusion about removal of the said shortages in stocks on the basis of their declaration only. Now,the Appellant had produced a copy of CBI report, wherein, inter alia, discrepancy in the stock was found to be due to excess reporting in the earlier period by the officers of the Appellant. This fact in our opinion needs to be scrutinized along with other evidences on record and the evidences that would be produced by the Appellant. Therefore, in the interest of justice, it is appropriate to remit the case to the Ld.Commissioner - Decided in favour of assessee.

Summary

Issues: Application for waiver of pre-deposit of duty and Cess amounting to Rs. 11.88 Crores, penalty imposed under Section 11AC of Central Excise Act, 1944.

Analysis:
1. The Appellant, a Govt. of India Undertaking engaged in coal production, sought waiver of pre-deposit of duty and penalty amounting to Rs. 11.88 Crores imposed due to shortages in their coal stock reflected in the ER-1 return for May 2011. The shortages were discovered through vigilance department's stock verification, with 13.10 lakh M.T. found short in January 2011 and 11.76 lakh M.T. in April 2011.

2. The Appellant contended that no coal was removed without payment of duty, and vigilance cases along with a CBI enquiry were initiated to investigate the shortages. A CBI report revealed discrepancies in stock reporting due to excess reporting in the earlier period by the Appellant's officers. However, this report was not before the adjudicating authority during the initial proceedings.

3. The Revenue supported the findings of the Commissioner but acknowledged the need for re-examination in light of the CBI report. The Tribunal decided to dispose of the Appeal by waiving the pre-deposit requirement and taking up the case for further examination with the consent of both sides.

4. The Tribunal found the issue centered around duty demand on shortages recorded in the ER-1 return by the Appellant. Considering the CBI report's findings and the need for a fresh examination, the case was remitted back to the Commissioner for a reevaluation. The Commissioner was directed to consider all evidence, including the CBI report and any additional evidence presented by the Appellant, ensuring a fair opportunity for the Appellant to be heard.

5. The decision to remand the case was made in the interest of justice to thoroughly scrutinize the discrepancies in stock reporting and address all evidences on record. The Tribunal allowed the Appeal by remand, keeping all issues open and disposing of the Stay Petition.