2015 (8) TMI 493 - SC - Central Excise

Clandestine removal of goods - Shortage of goods - Held that - Respondent had pointed out that this was due to accounting errors and there was no shortage in fact because of the reason that in respect of many inputs even stocks in excess was found. It was demonstrated before the authorities that though the shortage of the inputs was to the tune of ₹ 25.67 crores, at the same time many other inputs were in excess and those figures were to the tune of ₹ 27.59 crores during the same period. This fact alone demonstrates the bona fides of the respondent in claiming the Modvat credit on the basis of figures disclosed by them in respect of the inputs which were used while manufacturing the motor vehicles. A finding of fact is recorded that there was no clandestine of removal of any inputs. It is therefore, not a case for any interference. - Decided against Revenue.

Summary

The Supreme Court dismissed the appeal, finding no interference was needed as the respondent demonstrated accounting errors and no shortage of inputs, with some inputs even in excess. The Court noted the respondent's bona fides in claiming Modvat credit and found no clandestine removal of inputs.