2016 (9) TMI 41 - AT - Central Excise

Demand - duty on difference between finished goods reported in their 3CD returns and the RG-1 daily stock account - less quantity of clearance has been shown in their ER-1 returns as compared to the quantity of sale mentioned in the Balance-sheet - Held that - it is obvious that the criteria for recording sales production etc. in the Balance-sheet significantly different from that required in ER-1. In the present case, the appellants have produced a reconciliation figures which show the variance was on account of trading, labour charges and some short quantity received. The same has not been challenged. Therefore, by following the decision of Tribunal in the case of Composite Boards (P) Ltd. 2009 (7) TMI 410 - CESTAT, CHENNAI , where in similar circumstances relief was granted, the impugned order is set aside. - Decided in favour of appellant

Summary

Issues:
Demand of duty based on discrepancies between 3CD returns and RG-1 daily stock account.

Analysis:
The case involved a demand of duty on the variance between finished goods reported in the appellant's 3CD returns and the RG-1 daily stock account. It was alleged that the appellant had discrepancies in the quantity of clearance reported in their ER-1 returns compared to the quantity of sale mentioned in the Balance-sheet for the year 2005-06. A demand of &8377; 1,01,522/- was raised and confirmed by the lower authorities.

The appellant's counsel presented a reconciliation statement showing differences in figures between the Balance-sheet and ER-1 due to trading (export), labour charges, and short quantity received during dispatch. The counsel argued that the criteria for recording production value in the Balance-sheet differed significantly from that required in ER-1. Reference was made to a Tribunal decision in the case of Composite Boards (P) Ltd. to support this argument.

The respondent's representative relied on a decision of the Hon'ble High Court of Punjab & Haryana in the case of Martin & Harris Laboratories Ltd. and supported the impugned order. However, the Tribunal noted that the decision in Martin & Harris Laboratories Ltd. was made when the assessee's explanation was not accepted, and the criteria for recording sales production in the Balance-sheet differed significantly from that in ER-1. In the present case, the appellant provided reconciliation figures showing variances due to trading, labour charges, and short quantity received, which were not disputed. Citing the Tribunal's decision in Composite Boards, the impugned order was set aside, and the appeal was allowed.

The judgment was pronounced on 29.07.2016 by Shri Raju, Member (Technical) at the Appellate Tribunal CESTAT MUMBAI.