By TIOL News Service

NEW DELHI, MAY 21, 2014: THE The appellant is a PSU &has several steel plants. Steel manufactured by different plants is cleared on payment of duty to various stockyards in the country called Branch Sales Offices (BSOs) from where the steel products are sold.

The dispute in this case is in respect of BSO, Bhilai, District, Durg . The BSO, in question, and all other BSOs have central excise registration as registered dealer and issue cenvatable invoices. In this regard, they maintain an account of receipt and sale of the steel products in RG-23-D register. The stockyards conduct annual stock taking and the quantity of each product received from a particular steel plant and the quantity of that product sold are reconciled.

On the basis of records of such stock taking in respect of BSO, Bhilai, the department found that there was excess sale of certain steel products as compared to the quantity of those products received from the respective steel plant.

So, SCN was issued to the four steel plants from whom the alleged excess quantity was received by the BSO, Bhilai.

The CCE, Raipur adjudicated the case and confirmed the total demand of Rs.79,93,944/- with interest and penalties u/r 173Q of CER, 1944.

Before the CESTAT the appellant submitted that on account of large number of products being handled and difference in the accounts maintained at the steel plants and at the stockyard, there were variations between the quantity of a product recorded as received on the basis of the invoices issued by the steel plant and the quantity of the product mentioned as sold in the sale invoices issued by the stockyard, that the difference between the quantity received and the quantity sold may be due to the various reasons including the difference in weigh bridges, product mix up etc. and merely on account of such difference, it cannot be alleged that the quantity of a particular product received form a particular steel plant was more than that mentioned in the invoice issued by the steel plant and on this basis, the duty cannot be demanded, that in respect of other products, there were shortages also and if the excesses are adjusted against shortages, the net excess would be negligible. It was also submitted that the provisions of s. 11AB which are effective from 28.09.1995 cannot be applied as the demand pertains to the period from June, 1992 to March, 1995.

The Bench after narrating the pleas put forward by the appellant observed -

+ The entire case of the department against the appellant is based on the stock taking records at the BSO, Bhilai which mentioned excess receipt in respect of certain steel products received from certain steel plants i.e. in respect of certain steel products received from certain steel plants, the quantity sold as per the records of the stockyard is more than the quantity received from the said steel plant.

+ But this difference can be due to various reasons like difference in weighing scales and product mix up and just from this difference it cannot be presumed that the concerned steel plants had cleared the alleged excess quantity without payment of duty.

Holding that the order is not sustainable, the same was set aside and the appeal was allowed.

(See 2014-TIOL-812-CESTAT-DEL)