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TMI Blog2018 (12) TMI 1529X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai Tribunal order No. A/85327/2018 dated 22.02.2018, wherein the same issue of the appellant themselves was decided in their favour. 3. Sh. A Mishra Ld. Deputy Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 4. On careful consideration of the submissions made by both the sides and perusal of Mumbai Tribunal's order dated 22.02.2018, we observed that the same issue in the appellant's own case has been decided by this Tribunal whereby the demand raised on such theoretical shortage was set aside and in cases where lower authority has set aside the demand, the Tribunal has upheld the order of the lower authority. The Tribunal order dated 22.02.2018 is extracted below: "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 Excise records of raw material and finished goods. The shortages of the raw material and finished goods appeared either the due to reconciliation of accounts as well as discrepancies detected during quarterl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 end and stocks of finished goods, stores and raw materials including components (except those in unopened boxes) have been verified subsequent to the year end as explained in Note 4(c) on Schedule 25. For stocks relating to tools with vendors and material with fabricators, confirmations have been obtained. 5.4 In our opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses 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 credit on account of error, omission or mis-conception. According to the appellant, none of these ingredients is present in the appellant's case. Sub-rule (2) of the Rule contemplates full accounting for of the disposal of inputs. The rule does not permit of disallowance of credit in the absence of any evidence that the inputs have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the shortages detected during physical tallying, that too without taking into account the excesses noticed. Since there is no evidence, that the excesses are not the result of clandestine receipt of inputs, the same view is required to be taken in regard to shortages also, that the shortages are not the result of any clandestine or unauth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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