2017 (9) TMI 909 - AT - Central Excise

Shortage of Finished Goods - clandestine removal or not - Held that - there is no case of the department that short found quantity was removed by the appellant clandestinely or otherwise - The adjudicating authority has not properly considered the reasons stated by the appellant regarding the shortage alleged by the department. Extended period of limitation - Held that - The shortages were reflected in annual reports and there was no suppression and hence extended period of limitation was not applicable. The matter needs re-consideration by the adjudicating authority, after taking into account all the explanation, based on the documents - appeal allowed by way of remand.

Summary

Issues:
1. Duty demand on shortage of finished goods.
2. Appeal against Order-in-Appeal upholding Order-in-Original.
3. Explanation of stock shortages by the appellant.
4. Consideration of previous judgments on similar cases.
5. Reconsideration and remand by the adjudicating authority.

Analysis:
1. The appeal challenged the Order-in-Appeal upholding the Order-in-Original confirming duty demand on the shortage of finished goods found during stock taking. The appellant, engaged in manufacturing lubricating oil, contested the demand notice issued by the department, which led to an adjudication order confirming the duty demand. The Commissioner(Appeals) upheld the order, prompting the appellant to file an appeal before the Tribunal.

2. Despite the notice, the appellant did not appear before the Tribunal. The Assistant Commissioner representing the Revenue reiterated the findings of the impugned order, emphasizing the duty demand on the shortage of finished goods.

3. The appellant explained the shortages as not actual shortages but rather as stock differences due to various invisible losses in the manufacturing process. They highlighted limitations in stock-taking methods in the petroleum industry, where stock differences were attributed to erroneous measurements rather than real shortages. The appellant argued that the lower authority did not adequately consider their submissions, including input-output ratios certified by a Chartered Accountant.

4. The Tribunal observed that similar issues regarding shortages in the earlier period were settled in favor of the appellant by previous judgments. It noted that there was no evidence of clandestine removal of the found quantity by the appellant. The adjudicating authority was directed to re-consider the matter, taking into account all explanations and documents, including previous judgments on similar cases. The Tribunal emphasized the need for a thorough review by the adjudicating authority, considering all aspects, and keeping other issues such as limitation open.

5. Ultimately, the Tribunal allowed the appeal by remanding the matter to the original adjudicating authority for a denovo adjudication. The Tribunal stressed the importance of considering all explanations and previous judgments while re-evaluating the case, ensuring a comprehensive review of the matter before making a final decision.