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2023 (6) TMI 149 - AT - Service TaxDemand of service tax alongwith interest and penalty - transaction in purchase and sale of commodity (Trading) - apparent difference in the turnover shown in the balance sheet as well as in the ER-1 returns - failure to produce documentary evidence to establish that the disputed income (escaped turnover) is related to commodity trading - HELD THAT - Appellant have lead sufficient evidence and explained the apparent difference. Both the Court below have not found anything erroneous or misgiving in the cogent explanation given by the appellant corroborated by books of accounts and vouchers. Undisputedly, appellant has profit from trading in commodities Rs. 8,52,60,853/- during the period. Further, the contentions are also supported by the certificate of the Chartered Accountant. It is further found that there is a categorical finding recorded by the Commissioner (Appeals) in favour of the appellant to the effect that the appellant have properly explained the apparent difference supported by books of accounts- commodity trading account, ledger etc. Thus, in spite of finding that the apparent difference is properly reconciled, still the Commissioner (Appeals) have rejected the appeal by some irrelevant observations without there being any finding of fact against the pleadings of the appellant. Impugned order set aside - appeal allowed.
Issues involved:
The judgment concerns the demand of Central Excise duty, interest, and penalty under Section 11AC of the Central Excise Act amounting to Rs. 43,87,461. Summary of Judgment: Issue 1: Central Excise Duty Demand The appellant, a manufacturer of MS Ingots, was alleged to have short paid Central Excise duty during FY 2015-16. The discrepancy in the value of goods sold as per the balance sheet and ER-1 returns led to a demand of Rs. 86,45,221. The appellant contended that a portion of this amount was not subject to excise duty as it was already recovered from customers. The Adjudicating Authority acknowledged this and dropped a portion of the demand. Issue 2: Profit on Commodity Operations Another part of the demand, amounting to Rs. 3,50,99,689, was attributed to profit on sale and purchase of commodity operations erroneously reported as sales of products. The appellant provided detailed explanations, including party-wise details of net sales from commodity operations, supported by relevant documents. Despite the explanations and evidence provided, the Adjudicating Authority confirmed this demand along with the penalty. Issue 3: Appeal and Commissioner's Decision The appellant appealed the decision to the Commissioner (Appeals) who upheld the Adjudicating Authority's findings. The appellant argued that they had produced sufficient evidence, including ledger accounts and supporting documents, to establish the nature of the disputed income related to commodity trading. The Commissioner acknowledged the evidence presented but still rejected the appeal. Issue 4: Tribunal's Decision Upon review, the Tribunal found that the appellant had adequately explained the discrepancies and provided substantial evidence through books of accounts and vouchers. The Tribunal noted that the appellant's contentions were supported by a Chartered Accountant's certificate. Despite this, the Commissioner (Appeals) had rejected the appeal based on irrelevant observations. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits. In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of the evidence presented and the proper reconciliation of the apparent differences in the case.
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