2019 (1) TMI 60 - AT - Central Excise

Clandestine removal - manufacture of Calcined Petroleum Coke from Raw Petroleum Coke - period of dispute is from June 1991 to October 1993 - Held that - It is admitted fact on record that weight recorded in weighment slips was gross weight, whereas the weight reflected in gate passes was net weight. The Central Excise duty is to be paid on net weight because the purchaser of the goods has paid for goods which are covered by net weight and the demand is not confirmed on the basis of net weight. The demand is confirmed on the basis of gross weight, therefore, the said confirmation is not sustainable - confirmation of demand of ₹ 64,000/- along with equal penalty is set aside. Demand of around ₹ 16 lakhs of Central Excise duty - discrepancies in the weight reflected in clearances shown in RG-1 Register and the clearances arrived at on the basis of packing material utilized as reflected in Bag Register - Held that - During the relevant period there was one rule namely Rule 173E of Central Excise Rules, 1994 on statute which required to declared principal raw material required for manufacturing of unit quantity of final product. The provision of law was that through a notification CBEC would declared principal raw material used in respect of specified final product and on the basis of utilization of principal raw material, there was provision under said rule to estimate goods manufactured - demand which is around ₹ 16 lakh of Central Excise duty and equal penalty imposed are set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Discrepancies in quantities cleared
- Discrepancies between quantity in RG-1 Register and bags utilized
- Discrepancies in quantity recorded in GRs and gate-passes
- Allegations of clandestine removal
- Cenvat credit availed and debited
- Central Excise duty demand confirmation
- Rule 173E of Central Excise Rules, 1994 application

Analysis:

1. Discrepancies in Quantities Cleared:
The Revenue issued a show cause notice alleging discrepancies in quantities cleared, leading to a demand of Central Excise duty. The issue was initially adjudicated and later remanded by the Tribunal. The final order dated 02.09.2014 resolved certain issues, leaving discrepancies in gate passes and weighment slips unresolved. The confirmation of demand based on gross weight rather than net weight was found unsustainable, leading to the set aside of the demand and penalty.

2. Discrepancies in RG-1 Register and Bags Utilized:
Another issue involved a demand of Central Excise duty based on discrepancies between clearances in the RG-1 Register and clearances determined by packing material utilization. Rule 173E of Central Excise Rules, 1994 required the declaration of principal raw materials, but packing materials like bags were not declared as such. The estimation of manufactured goods based on packing material usage lacked legal authority. Consequently, the demand of around &8377; 16 lakhs and the equal penalty imposed were set aside, leading to the overall reversal of the confirmed Central Excise duty of &8377; 17,44,975/-.

This judgment highlights the importance of adhering to legal provisions and accurately determining quantities and materials for Central Excise duty assessment. The Tribunal's meticulous analysis and application of relevant laws resulted in the reversal of demands and penalties, emphasizing the necessity for compliance with statutory requirements in excise matters.