9911796707
TMI Blog2018 (3) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... Ethlene Glycol (MEG). Duty was also demanded alleging that the goods sent to jobworker/ refillers has been undervalued by claiming abatements under the head of distributors discounts/ rebates etc. The adjudicating authority vide impugned order set aside the demands on being satisfied with the reconciliation shown by the Appellant as well as in view of the fact that quantum of shortage is miniscule percentage. He also held that as no goods have been removed without payment of duty by the Respondent, duty demand on such shortages arising out of reconciliation and on ratio basis is not sustainable. In case of goods sent to jobworker/ refillers he held that the issue involved is revenue neutral hence dropped the demand. Being aggrieved with the impugned order the revenue has filed the present appeal. 2. Shri A.B. Kulgod, Ld. AC (AR) appearing for the Revenue submits that the goods were cleared to the job workers / re-fillers and there was no sale, hence the abatements claimed by the Appellant are not permissible in terms of Section 4 of Central Excise Act, 1944. The goods were under-valued to the extent of abatement as it was not sale and therefore the demand of Rs. 27,051/- + Rs. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period September 1998 May 2001 raising demand on the ground that the difference between the physical stock of raw material and finished goods counted by the Respondent every quarter and alleged the difference have been occurred due to clandestine removal. He submits that the allegation of clandestine removal is to be proved by the Department by showing positive evidence. That the adjudicating authority was himself able to record that in case of raw materials, the respondent was able to reconcile 98.81% of the raw material and in case of finished goods, the respondent were able to reconcile 99.63% of the finished goods. He further submits that in case of demand of duty on clearance made to job workers, who are re-fillers, there cannot be any duty demand as any duty borne by the respondent on clearance to refillers is available under Modvat credit, hence the issue is revenue neutral, as held by the Commissioner. 4. We have heard both the sides and perused the records. 5. We find that the Ld. Adjudicating authority found that during the impugned period, the Respondent had two accounting packages for maintenance of financial records as well as for maintaining Central exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arts was observed. The appellant reconciled this variation and found that shortage worth Rs. 27.67 was not getting reconciled. Similar was the position in respect of excesses worth Rs. 17 crores. The order impugned has been passed in view of the shortages being unreconciled. 2.The submission of the appellant is that the? shortages and excesses are merely the results of accounting errors and there is no wrong availment or utilisation of credit and that there is no requirement or justification to disallow the credit. It is the appellant's submission that a proper appreciation of the method of accounting and the chances of errors that such a complex system involves in view of the large numbers and volume, would satisfy that the non-reconciliation of a small (0.24) percentage of the inputs is intrinsic to the situation and no duty demand is warranted. At the outset, the appellant has pointed out that this level of accounting variation is commercially acceptable and that the appellant's auditors, namely Price Water House has certified to this with the following observations :- "5.3 The stocks of spare parts of the Company have been physically verified by the management at the year e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious types of parts during physical verification, etc. The appellants also pointed out that, during reconciliation, though the Customs Authorities have accepted many of the shortages as explained and reconciled, a huge quantity of excesses of about Rs. 17 crores remains unreconciled on account of the fact that the shortages and excesses are in respect of parts in respect of different varieties of vehicles. It is the submission of the appellants that the exclusion of the parts found in excess while tallying the account is not correct or justifiable at all inasmuch as these parts also form part of the inputs recorded in the appellant's input accounts. 4.The substance of the appellants' submission is that? any large organisation has to put up with some discrepancies noticed on stock taking and in the absence of evidence of diversion or mis-utilisation, no demand is justified. In support of this contention, it is being pointed out that the shortages come to a clearly negligible percentage and Tax Authorities also should accept the variation and not raise any demand. It is being submitted that a demand for return of credit under Rule 57-I can arise only in cases involving taking of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that goods have been improperly disposed of. The appellants have explained that they have a detailed and reliable system of accounting of inputs and that all aspects including pilferage are taken care of. It has been pointed out that wherever the inputs have been disposed of other than in the manufacture of final products, including pilferages detected, the appellants have reversed Modvat credit. It is also their contention that the shortages in stock detected during physical verification is no positive evidence that the inputs found so short were disposed of in any manner other than in the manufacture of final products. These submissions of the appellant merit acceptance. The very presence of unaccounted excess inputs worth more than Rs. 17 crores establishes that there are errors in the accounts/physical verification. 7.The appellants have a huge and complex accounting? problem. It is beyond manual tally. The appellants have put in place sophisticated computer based accounting systems to ensure accuracy and efficiency. The evidence on record does not indicate any diversion of inputs in contravention of rules relating to utilisation of inputs. The demand is merely based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
