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TMI Blog2023 (8) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ar has accepted these changes. Irrespective of acceptance or otherwise of the changes in the Schedules of the Balance Sheet, it is found that there is nothing on record to doubt the veracity of the Certificates issued by the Charted Accountant or the reconciliation statements submitted by them - it is observed that duty cannot be demanded merely based on the difference in sales figures found between the balance sheet and the and ER-1 Returns. There must be some positive evidence brought on record to substantiate the allegation of clandestine clearance. Mere allegation of shortage based on the difference in sales figures found between the balance sheet and the and ER-1 Returns, cannot be the basis for confirming the central excise duty on the differential quantity. In the case of KUTCHH STEELS PVT. LTD. VERSUS COMMISSIONER OF C. EX. ST., RAJKOT [ 2014 (6) TMI 483 - CESTAT AHMEDABAD ], it has been held that the demand based on difference of sale, income as indicated ER-1 and Balance Sheet, in the absence of any evidence of clandestine manufacture and sale of goods, is not sustainable - In the case of MARTIN HARRIS LABORATORIES LTD. VERSUS COMMISSIONER OF C. EX., GURGAON [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Authorized representative, not sustainable. The demand confirmed in the impugned order, except Rs 4,65,299/- accepted and paid by the Appellant, in respect of the 14 cash memos. The confiscation of the excess quantity of master batch found and the redemption fine imposed in the impugned order upheld - penalties set aside. Appeal disposed off. - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) Shri N.K. Chowdhury, Advocate for the Appellant (s) Shri S. Mukhopadhyay, Authorized Representative for the Revenue ORDER M/s. Pratap Polysacks Ltd. (The Appellants) are engaged in the manufacture of HEPE/PP Sacks, Woven Fabric (both laminated and unlaminated) woven sacks (both laminated and un-laminated) liner and cut pieces falling under chapter 39 of the First Schedule to CETA, 1985. 2. The Central Excise officers of Haldia Commissionerate visited the factory of the Appellants on 04.06.2008 and conducted physical verification of stock in their factory. The officer found a quantity of 2375 kgs. of Master Batch in excess over and above the stock reflected in their RG-23A part-I account. A statement was recorded from Shri Arin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them specifically with regard to the alleged differences between the figures appearing in the monthly ER-1 register and those reflected in the Schedules to the balance sheet for the financial years 2005-06 2006-07 and 2007-08. Those have been fully explained by the Appellants and certified by the Chartered Accountants after examination of their books of accounts for those financial years. 7. The Appellants submit that so far as the excess of stock of 2260 kgs. of Master Batch found on physical verification of stock of raw materials on 12.06.2008 is concerned, they have not taken Cenvat credit on the excess quantity of Master Batch found. The plausible explanation for the excess was also given to the effect that difference might have occurred due to excess consumption of Master Batch recorded by the supervisor over a long period time. However, since no Cenvat credit was taken on such excess quantity of Master Batch, confiscation of the same does not arise. This view has been taken by the Tribunals in a number of cases and hence no penalty is imposable on the appellants on this count. 8. The Appellants submits that regarding the alleged shortage of stock of finished goods na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs.2,03,968/- and not Rs.4,06,654.00. They examined the figures and there was no value difference when compared with all the items and their value during the financial year 2007-08. A reconciliation statement has been prepared by them from which it can be seen that there was no difference with the items and their values were shown in total. The difference against fabric was neutralized by the minus difference in respect of other items namely fabric cut pieces, laminated fabrics and sacks. Hence practically there was no difference between the figures mentioned in the schedule of the Balance Sheet and those reflected in the monthly ER-1 returns. 11. The Appellants submit that in respect of their duty demanded on the cash memos, out of those 64 cash memos 50 cash memos had been accepted and already been covered under show cause notice dt.26.05.2009 and the demand in respect of the remaining 14 cash memos had been included in the present proceedings, involving duty of Rs.4,65,299/-. Hence, these value of cash memos had been reflected in the Schedule of Balance Sheets and not in the ER-1 Returns. They have already paid an amount of Rs.4,65,299/- on 29.04.2009 , in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages. Thus, if the Certificates correcting the mistakes are taken into account, then there was no shortage. So, the main issue to be decided is whether the correction Certificates dated 18.06.2008 issued by the Charted Accountant can be accepted or not. 17. We observe that the Correction Certificates are added as Corrigendum to the Schedule. They are submitted to the Registrar of Companies and accepted by them. Hence, the corrected certificates become part and parcel of the Schedule to the Balance Sheet . The Ld A.R submitted that before correcting the Schedules of the Balance Sheets, it must be approved by the extraordinary General Body Meeting. Also, there is no evidence on record that the Registrar has accepted these changes. Irrespective of acceptance or otherwise of the changes in the Schedules of the Balance Sheet, we find that there is nothing on record to doubt the veracity of the Certificates issued by the Charted Accountant or the reconciliation statements submitted by them. Hence, we agree with the submission of the Appellant that there was no shortage after the correction of the mistakes and hence the duty demanded based on the balance sheet figures is not sustainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps of varying quantity, some strips 2-10 while others contained 12-20 or even 30 tablets. Similarly, the liquid bottles had different capacities, such as, 60 ml., 100 ml. or even 200 ml. The mistake occurred while converting or computing the total production by the officers/official who prepared the balance sheets in the Head Office. There is not an iota of evidence on the record to prove the clandestine clearance of the goods by the appellants without payment of duty in the market during these years in dispute. None from the market has come forward to accept the purchase of the goods/medicines, from the appellants company without payment of duty during these years. There is also no evidence to prove the excess receipt of inputs by the appellants company during these years from outside. No unaccounted goods were also detected and seized from the factory of the appellants. In the absence of such an evidence, in our view, the balance sheet could not be taken as a sacrosanct documents for proving the allegations of clandestine production and removal of the goods by the appellants and thereby evasion of duty by them. 18.2. Following the above decisions, we hold that the demands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantity of master batch and the redemption fine imposed in the impugned order. 21. Regarding, penalty imposed on the Director Shri.S.S. Jindal and the Authorized Representative Shri. B. Kamilla, we find that there was no role of them in the alleged short payment of duty. The demand has been confirmed based on the difference between the sales figures available in the Balance Sheet and the value declared in the ER-1 returns. The Director and the Authorized Representative has no role in the difference between the figures. The error in the figures, if any, has been committed by the Charted Accountant, which has been admitted by the Firm and rectified. The issue in respect of the alleged clearance without payment of duty by issuing the cash memos has been settled before the settlement commission in respect of 50 cash memos. The duty involved in respect of the remaining 14 cash memos amounting to Rs.4,65,299/- has also been paid. In respect of this also there is no clear finding in the impugned order regarding the role of the Director or the Authorized representative. Just because they admitted and paid duty, it cannot be concluded that there was clandestine clearance. Since, the rol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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