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TMI Blog2017 (9) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... (5B) of the Cenvat Credit Rules, 2004 as they had written off the value of inputs at the time of annual stock taking, but did not reverse the amount of CENVAT credit for the period 31.12.2004 and for the year 2005-06 on the said inputs. The Adjudicating Authority confirmed the demand of duty of Rs. 21,07,119.49 and Education Cess of Rs. 42,142.00 alongwith interest and also imposed penalty of equal amount of duty. By the impugned order, the Commissioner (Appeals) set aside the Adjudication order. Hence Revenue filed this appeal. 2. Heard both sides and perused the appeal records. 3. On perusal of the Adjudication order, I find that the Adjudicating Authority proceeded on the basis that the quantity of inputs so written off is contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the Show Cause Notice which is reproduced below :- "2.4 From the stock report as on 31.12.2004 appeared in stores ledger, it is evident that adjustment of inputs was made both on short and excess. It is reiterated that shortages as detected by the management of the company, were on a/c of the fact that whereas the inputs were accounted in records on formula basis, but were issued for use in the manufacture of said goods as per their requirements. A part quantity of inputs/ raw materials etc. to the tune of 1436.500 kgs were found in short in stores which were written off by making adjustment was to the extent of 0.22% of the total quantity of inputs etc. (639512.55 kgs) received in factory in the relevant period. Similarly during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of Rule 5B of the Cenvat Credit Rules. As already noted, there was no provision under which the Modvat credit already taken under the Rules of 1944 could be directed to be reversed simply because the input goods were not utilised for a certain period of time. We also note that there is significant difference in the accounting approach for the income-tax purpose and the approach for stock maintenance for the purpose of manufacturing activities relevant for the question of excise. Therefore, merely because the value of goods diminished in the books of account of the assessee would not by itself permit the Department to insist on reversal of the credit particularly when such goods were still available in the factory in usable conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to be normal. It was further found that that the establishment of the dealer is huge and complex which involved a complicated accounting problem. It cannot be controlled manually and they have put in place sophisticated computer based accounting system in order to ensure accuracy and efficiency. The findings further are that there was diversion of inputs in contravention of Rules relating to utilization thereof. The demand was based merely on the shortage detected during physical tallying. The dealer had not taken any account of the excess use of inputs for which no credit was claimed. Accordingly, the Tribunal found that once the excesses were not clandestine receipt of input, then the same view was required to be taken with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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