2018 (8) TMI 457 - AT - Central Excise

Clandestine removal - granulated slag - demand on the ground of difference between the quantity of the granulated slag shown in their Annual Operational Statistical Report and the quantity shown in the monthly ER-I Return, filed by the appellantassessee during the period from July, 2004 to March, 2008 - Held that - The demand of Excise duty has been calculated on granulated slag based on the differential quantity of 6,91,315 MT of the slag between the quantity appearing in the operational statistical report at 9,33,117 MT and ER I at 2,41,802 MT. Reliance is placed in the case of Centurian Laboratories Vs. CCE 2013 (9) TMI 245 - CESTAT AHMEDABAD wherein it has been held that demand cannot be confirmed based on private/internal records. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Discrepancy in quantity of granulated slag cleared by the appellant
- Demand of Excise duty based on the difference in statistical report and ER-1 Returns
- Reliance on private records for demand confirmation
- Interpretation of annual dispatch summary
- Legal entity status of ACC, DCSL
- Appellant's capacity to manufacture additional quantity
- Exemption of molten slag cleared to ACC, DCSL
- Case laws on demand confirmation based on private records

Analysis:
The Appellate Tribunal CESTAT KOLKATA heard an appeal against the Order-in-Original passed by the Commissioner of Central Excise, Bolpur. The case involved a discrepancy in the quantity of granulated slag cleared by the appellant, a manufacturer of iron and steel products. The Revenue alleged that clearances without duty payment were made based on the difference between the appellant's operational statistical report and ER-1 Returns. The appellant argued that a significant portion of molten slag was sold to another company for conversion into granulated slag, which was duly cleared with duty payment. The Tribunal noted that the demand was solely based on the quantity difference in the reports and that no other evidence of removal of goods existed.

The Revenue contended that the private operational statistical report was acceptable as authentic records for demand calculation. However, the Tribunal emphasized that reliance on private records alone was insufficient to confirm the demand. The Tribunal highlighted the exemption of molten slag cleared to the other company and questioned the calculation of duty demand without verifying the appellant's capacity to manufacture the additional quantity. Additionally, the Tribunal criticized the interpretation of an annual dispatch summary to hold the appellant liable for duty payment, stating that the document was not authoritative.

The Tribunal considered the legal entity status of the other company and the agreements in place for molten slag transfer and granulated slag manufacturing. The appellant's argument regarding the separate granulation plants and duty payment on cleared granulated slag was also taken into account. Citing relevant case laws, the Tribunal concluded that demand confirmation based solely on private records was not valid. Ultimately, the impugned order was set aside, and the appeal filed by the appellant was allowed, as the issue was deemed to be settled by previous decisions.