Steel Authority of India Ltd Vs Commissioner of Central Excise (CESTAT Bangalore)
The CESTAT Bangalore in M/s. Steel Authority of India Ltd. v. The Commissioner of Central Excise [Appeal No. E/562/2008 dated May 25, 2023] overturned the decision to demand excise duty based on the differential quantity of goods as per the ER-1 returns and the audited books of accounts. The tribunal determined that the discrepancy between the values mentioned in the RG-1 and the physical stock statement provided by the assessee was inherently inaccurate, as both values were estimated.
Facts:
M/s. Steel Authority of India (“the Appellant”) is engaged in the business of manufacturing of iron and steel products and it conducts annual stock verification of finished/ semi -finished goods manufactured every financial year.
The Revenue Department found various differences between physical stock of finished/semi-finished goods shown in Appellant’s stock statement when compared with the adjusted RG-1 for the year 2001-02, 2002-03, 2003-04 (“the Impugned Period”).
Subsequently, the Revenue Department (“the Respondent”) issued 3 Show Cause Notices dated April 4, 2003, March 19, 2004, and April 7, 2005, (“the Impugned SCNs”) respectively for the Impugned Period, demanding excise duty on the goods found short during the comparison. Later, the Respondent vide an Order (“the Impugned Order”) confirmed the demand of duty.
Being aggrieved, this appeal has been filed.
The Appellant contented that the goods recorded in RG-1 are based on estimated production, whereas, physical stock of goods was recoded on the basis of volumetric estimation and goods are physically weighed only at the time of clearance from the factory/deport. Thus, comparison of estimated production and estimated physical stock of goods is totally incorrect and will lead to improper conclusion. Further, the demanded duty is on the basis of differential quantity of goods based on ER-1 and goods shown in audited books of accounts.
Issue:
Whether the Revenue department was correct in issuing SCN on the basis of difference values stated in RG-1 and physical stock statements as reported by the Appellant ?
Held:
The CESTAT Bangalore in Appeal No. E/562/2008 held as under:
