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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 ..... e reversed or otherwise. 2. Sh. D.B. Shroff Ld. Senior Advocate and Sh. Udayan Choksi Ld. Advocate appeared for the appellant. Sh. D.B. Shroff at the outset submits that the same process of stock taking and recording shortage in financial account is carried out on regular basis and the same is intimated to the department in respect of the factory located at different places in the country. He submits that in respect of their other factory, the same issue was raised by the department, however, the entire demand raised has been set aside by the Tribunal. He refers to the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very complex problem the appellant carries this out on their computers. Annual physical check is also carried out. For the years 1999-2000, when the appellant carried out physical stock verification of the inputs, a large variation involving several crores (211) Rupees worth parts was observed. The appellant reconciled this variation and found that shortage worth ₹ 27.67 was not getting reconciled. Similar was the position in respect of excesses worth ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red for the manufacture of each variety of vehicle. The appellant has pointed out that errors can creep in for many reasons, like incorrect part numbers being captured in the computer data, consumption of parts in the manufacture of sub-assemblies going unrecorded, errors in noting down the various 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of final products, and clearance of inputs after reversal of the credit. In the present case, the demand is on account of the fact that there are some shortages which are not reconciled. The appellant s submission is that full reconciliation is not possible and that that is no ground to hold 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 ₹ 17 crores establishes that there are errors in the accounts/physical verification. 7. The appellants have a huge and complex acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised on above grounds are not sustainable. In case of demand made on valuation of goods sent to re-fillers, we find that the issue involved is revenue neutral, hence we hold that the demands are not sustainable since whatever duty was paid by the respondent was available to the re-fillers as credit. Similarly in the case of demand on account of MEG, we find that the respondent has also challenged the manner of verification conducted by the revenue. Further the adjudicating authority has also held that the shortage quantity is justified as being result of reconciliation conducted in past. Also there is no instance of removal of goods. In such given findings by the adjudicating authority and the fact that there is no evidence of removal of such stocks, the demand is not sustainable. Hence, we are of the view that there is no infirmity in the impugned order and we uphold the same. 5. In view of the above decision of the Tribunal, it is clear that the issue is no longer res-integra, therefore, the impugned order is not sustainable. Accordingly, the same is set aside and appeal is allowed with consequential relief, if any arise, in accordance with law. (Operative portion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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