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TMI Blog2016 (3) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the department about the same vide the letter attached with the appeal:- Date Amount 9th January 2000 Rs.21,315/- 12th June 2000 Rs.56,847/- 13th February 2001 Rs.49,765/- Total Rs.1,27,927/- The appellant has further alleged that as per the requirement of Income Tax Act, the appellant has been getting their accounts audited under the Income Tax Act, 1961 and the report is required to be submitted to the Income Tax Department under form 3CD. The annexure attached to the report in form 3CD for the financial year 1999-2000 and 2000-01 showed the following differences in stock of finished goods and raw material. Year ending March, 2000 Year ending March, 2001 Raw materials Base oil Additives Total Base oil Additives Total (i) Opening stock 1,289,610 97,965 13,87,575 5,314,142 305,732 5,619,514 (ii) Purchases during the year 17,069,732 1,691,353 18,761,085 8,344,561 1,363,708 9,708,269 (iii) Consumption during the year 13,033,145 1,485,628 14,518,772 11,764,522 1,452,554 13,217,076 (iv) Sales during the year 60,000 5,148 65,118 114,461 - 114,461 (v) Closing stock 3,976,587 200,577 4,177,165 1,707,752 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37,44,287/- and imposed penalty of equal amount under Section 11AC of the Central Excise Act. Being aggrieved by the said order, the appellant has filed the present appeal. 3. The learned counsel for the appellant submitted that there are number of reasons for shortages of raw material in the base oil viz. variation in weigh bridge calibration, variation in temperature, minor defect in flow meter, variation in viscosity while dip reading and temperature at the time of measurement of stock. He further submitted that the Tribunal in the case of Bombay Dyeing and Manufacturing Co. Ltd. reported in 1999 (113) ELT 331 has held that when the minor variation in physical quantities received is less by 1 to 2% compared to the quantity shown in the supplier s challan, then the credit of duty should not be denied where the manufacturer has taken the credit on the quantities shown in the documents. He also submitted that in this case, variation is very minor i.e. 0.6% of the total consumption and the same should be condoned. He also submitted that this Tribunal has consistently held that credit of duty should not be denied for minor variation in the quantity received physically compared to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been paying excise duty wherever there is shortage of finished goods. Further, the appellant on its own has debited the central excise duty of finished products found short and informed the department vide various letters dated 9.1.2000, 12.6.2000 and 13.2.2001 and the total amount debited is Rs. 1,27,927/-. He also submitted that there is no suppression of fact with intent to evade payment of duty on the part of the appellant and therefore extended period cannot be invoked and no penalty under Section 11AC can be imposed. 4. On the other hand, the learned AR reiterated the findings of the Commissioner. 5. I have heard the learned counsel for the parties and perused the records. 6. The matter in a narrow compass involves firstly, the demand of excise duty on account of reversal of credit on duty paid finished goods at the depot and secondly, the demand of excise duty on account of shortages of raw material at the factory both for the period 1999-2000 and 2000-01. 6.1 As far as the shortage of raw material is concerned, I find that the base oil being a petroleum product, its weight and volume is dependant upon temperature and density. AT the time of receipt in the factory, bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument:- CCE, Rajkot vs. Bombay Dyeing & Mfg. Co. Ltd. reported in 1998 (97) ELT 101, wherein in para 3 the Tribunal has held as under:- "3. The ratio of the decision of the (sic) relied? upon by the Tribunal decision Commissioner was that, when duty had been paid by the manufacturer of fibre on a particular quantity, but the quantity on receipt at the users factory was found to be less, apparently on account of loss and moisture during transit, credit would be available of the duty paid, and would not limited to the quantity actually received. The Tribunal emphasised such facts at the goods being on original packing, in support of its view that the loss was not due to any deliberate theft or pilferage, but due to evaporation of moisture. In the present case, for the difference in weight is on account of loss in moisture. There is no contention that the shortage in weight was due to any other factor, such as pilferage theft. The ratio of the Tribunal decision would therefore squarely apply." Neera Enterprises vs. CCE, Chandigarh reported in 1998 (104) ELT 382, wherein in para 5, the Tribunal has held as under:- "5. It is not disputed by the department that the goods were init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient of the inputs cannot be denied." 6.2 Secondly, as far as the shortage of finished goods at the factory and depots is concerned, the appellant has debited the duty on its own and informed the department vide various letters dated 9.1.2000, 12.6.2000 and 13.2.2001. The goods sold from depot are excisable goods on which excise duty has already been paid and this fact has not been rebutted by the department either in the show cause notice or even in the order-in-original. Therefore, keeping in view the facts and circumstances and the evidence on record, I am of the considered opinion that the shortages found are very minor in nature, i.e. 0.6% which is well accepted in petroleum products as observed in the judgments cited above. I also find that in the show cause notice also, there is no allegation that there is clandestine removal of goods by the appellant. 6.3 Further, as far as limitation is concerned, the entire demand appears to be time barred as it relates to financial year 1999-2000 and 2000-01 whereas the show cause notice was served on 26.3.2004 on the basis of shortages of raw material and finished goods as shown in form 3CD i.e. the report under the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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