2020 (1) TMI 667 - AT - Central Excise

Clandestine removal - shortage of stock - the appellant is in export warehouse receiving non-duty paid petroleum products for the purpose of export - HELD THAT - The demand stands raised only on the basis of losses which are either in the condonable limit or have not been correctly measured. There is no evidence of any removal of the product, in the said case demand of duty against the appellant can t be upheld. Appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged shortages in export warehouse, demand of duty and penalty, condonable limit for storage losses, remission application, improper storage handling, appeal against order

In this case, the appellant, engaged in export activities, received non-duty paid petroleum products in their export warehouse. A notice was issued based on ER1 returns alleging shortages and demanding payment of duty amounting to ?1,91,122 along with a penalty. The appellant contended that the losses for certain months were within the condonable limit of 0.5% prescribed by the CBEC for storage losses. They argued that the difference in quantity for another month was due to a measurement error related to the floating roof correction factor. The appellant emphasized that there was no evidence of clandestine removal, making the demand unsustainable.

The Assistant Commissioner of Central Excise confirmed the demand and penalty, citing the failure to file a remission application and attributing the losses to improper storage and handling by the appellant. The Commissioner (Appeals) upheld the demand due to the absence of a remission application but set aside the penalty. The appellant challenged this decision, highlighting that the losses were within the condonable limit and the correction in quantity was not a loss but a measurement adjustment.

During the appeal, the appellant argued that the demand was solely based on losses within the condonable limit or incorrect measurements, with no evidence of product removal. Citing precedents and circulars, the appellant contended that the demand was unjustified. After reviewing the arguments and the impugned order, the tribunal found no valid reason to uphold the demand. Consequently, the tribunal set aside the order and allowed the appeal, providing consequential relief to the appellant.