2005 (12) TMI 198 - AT - Central Excise

Summary

Issues:
1. Whether the demand for duty on shortage of inputs due to accounting error is valid.
2. Whether a small percentage of shortage in inputs justifies confirming the duty demand.

Analysis:
1. The case involved a dispute where the Department charged the assessee for clandestine removal due to a shortage of inputs amounting to 0.0021%. The Commissioner (Appeals) found that the shortage was not real but a result of an accounting error. Citing the judgment in the Carborandum Universal case, the Commissioner set aside the demand, stating that such a minimal percentage of shortage does not warrant denying Modvat credit. The Tribunal upheld this decision, emphasizing that the explanation provided by the assessee regarding the shortage being due to an accounting error was plausible and in line with previous rulings.

2. The Revenue contended that any shortage should result in confirming the duty demand. However, the Tribunal referred to a previous ruling in the case of Maruti Udyog Ltd., where a similar small percentage of shortage (0.24%) was considered insignificant and attributed to the complexities of managing a large number of inputs. In the present case, the Tribunal noted that the Commissioner (Appeals) had thoroughly examined the issue and found the shortage to be a mere 0.0021%. Considering the precedents and the explanations provided by the assessee, the Tribunal rejected the Revenue's appeal, affirming that such a minimal shortage did not justify confirming the duty demand.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal, emphasizing that a small percentage of shortage due to an accounting error does not warrant charging duty, especially when supported by relevant legal precedents and explanations provided by the assessee.