1997 (8) TMI 285 - AT - Central Excise

Summary

Issues:
Demand of duty based on alleged shortages in aerated water production. Discrepancies between Sales Manager's Report (SMR) and RG 1 figures. Allegations of clandestine removal of bottles. Failure to correlate use of flavors and concentrates with production. Lack of evidence on excess purchases of essences and bottles.

Analysis:
The appeal concerns a dispute over duty demand related to shortages in aerated water production by the appellants, who were franchise holders of M/s. Parle Exports Ltd. Discrepancies were noted between figures in the Sales Manager's Report (SMR) and RG 1 records, with an alleged shortage of 11,65,884 bottles. The lower authority dropped proceedings after considering explanations about purchases from other franchise holders and lack of evidence on clandestine removal.

The revenue appealed this decision, citing statements from company officials admitting purchases from other bottlers not reflected in SMRs. However, the company failed to provide details of inter-franchise purchases despite repeated requests. The lower authority's reliance on lack of evidence of excess purchases and failure to correlate figures was challenged.

The Commissioner found the demand based on SMR-1 figures to be speculative and lacking evidence. The failure to produce details of inter-franchise purchases led to an inference of no such purchases. However, some details were later produced, raising concerns about the acceptance of evidence not presented during investigation.

The adjudicating authority's decision was criticized for ignoring evidence of dilution by bottlers and discrepancies in production figures. The lack of evidence on excess purchases of bottles was questioned due to the reuse of bottles in the industry. The lower authority's failure to conduct a detailed correlation exercise between SMR and RG 1 figures was highlighted.

The Tribunal concluded that a fresh exercise was necessary to verify the correlation between reported purchases and alleged shortages. The decision was remanded for further adjudication based on a detailed comparison of figures. The dismissal of cross-appeals was noted as being misconceived in law.

In summary, the judgment addresses the duty demand issue concerning alleged shortages in aerated water production, emphasizing the need for a thorough correlation exercise and verification of reported purchases to support conclusions. The decision highlights the importance of detailed investigations and evidence in resolving disputes related to duty demands and production discrepancies.