9911796707
TMI Blog2021 (10) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... l or input is used in or in relation to manufacture and not otherwise. Limestone is not even a cenvatable product. In this case, the show cause notice is issued by the Department alleging production/ manufacture of clinker from the limestone found short. There is no evidence that the clinker has been manufactured. Although limestone is the main ingredient for manufacture of clinker other ingredients, power, etc. are also required. There is nothing on record to show that there was corresponding proportionate shortage in the stock of other raw materials or that excess electricity has been consumed to correspond to the shortage of raw material - Having found to shortage, the respondent itself paid central excise duty on the clinker found short. On the question of shortage of limestone they conducted an enquiry and thereafter provided the explanation to the Revenue. The argument of the Revenue is that this explanation is not satisfactory and this shortage has not been reflected in their records or in the returns which they filed with the mines. It is observed that if these were indeed recorded in their books of accounts and reflected in their returns then there will be no shortage. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is a raw material for the respondent and 32051 M.T. of Clinker which is a final product. The respondent paid the central excise duty on the clinker found short. They could not explain to the satisfaction of the Accountant General Audit the shortage of raw material. A letter dated 03.03.2017 was issued by the Superintendent, CGST Range III, Nimbahera seeking clarification and respondent through their letter dated 11.06.2017 explained the shortage of raw material in their factory as follows :- (a) The raw-meal factor was changed in March, 2015 from 1.50 to 1.53. As a result of the change in raw-meal factor the consumption of limestone was shown less by 36.7 M.T. from April, 2014 to February, 2015 in the books than actual. (b) Actual quantity errors resulting from normal weighbridge tolerance error and approximation of quantity of limestone during start of operation when weighbridge was not installed and breakdown of weighbridge. In order to avoid short payment of royalty, excess quantity was considered on conservative basis. Maximum difference is attributable to this. (c) Limestone has been captively used for levelling the raw material storage yard, access roads to mines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw mill to crusher 9. Approach road correction for movement in monsoon by filling limestone 2015 4000 Approach road at zero point, colony, outside gate no. 2, truck parking yard, raw mill area etc. for movement of trucks, cherry picker, crane during monsoon 10. Crushed LS measuring error between belt weigher and weigh feeder 2013-15 42516 Average 1% error considered in the weighment of belt weigher limestone weigh feeder 11. Limestone from mines without weighment due to weighbridge not operational 2013-15 47300 Assumption : average 5% differential tonnage considered in manual assessment of truck wise weighment in absence of weighment through weighbridge 12. Dead stock of limestone stored outside in yard 2015 2900 Crushed limestone has been stored outside stockpile as emergency mitigation plan, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (a) Whether the Commissioner has erred in dropping the demand without considering the fact that the reasons for shortage of Limestone, as advanced by the assessee at a later stage, were not explained to the Internal Physical Verification Agency or to the A.G. Audit and, therefore, the same are nothing but an afterthought. (b) Whether the Commissioner has erred in dropping the demand without considering the fact that the Internal Physical Verification Report indicating, shortage of 32,051 M.T.s clinker and 2,40,761 M.T.s Limestone has been accepted by the assessee and duty has been paid by them in respect of quantity of Clinker found short which proves that the assessee have indulged in clandestine clearance of Clinker. (c) Whether the Commissioner has erred in dropping, the demand without considering the fact that no quantity of shortage of Limestone resulting from various reasons, as claimed by the assessee at a later stage, has been accounted for by the assessee at the relevant point of time and, therefore, the only conclusion that can be drawn is that such quantity of Limestone has been used in the manufacture of Clinker, and which has been cleared clandestinely with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Although limestone is the main ingredient for manufacture of clinker other ingredients, power, etc. are also required. There is nothing on record to show that there was corresponding proportionate shortage in the stock of other raw materials or that excess electricity has been consumed to correspond to the shortage of raw material. If all these ingredients were available, there could have been suspicion as to what happened to the clinker which was manufactured. In the present case all that was found was a shortage of clinker and a shortage of limestone. These shortages were not discovered by the Department but by the respondent/assessee themselves. Having found to shortage, the respondent itself paid central excise duty on the clinker found short. On the question of shortage of limestone they conducted an enquiry and thereafter provided the explanation to the Revenue. The argument of the Revenue is that this explanation is not satisfactory and this shortage has not been reflected in their records or in the returns which they filed with the mines. We observe that if these were indeed recorded in their books of accounts and reflected in their returns then there will be no shortage ..... X X X X Extracts X X X X X X X X Extracts X X X X
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