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2023 (8) TMI 346 - CESTAT KOLKATAClandestine Removal - demand mainly due to the difference between the sale figures available in the Schedule of the Balance Sheet for financial years 2004-05, 2005-06, 2006-07 and 2007-08 and the quantity of clearance of those products declared in the monthly ER-1 returns filed by them during the corresponding financial years - whether the correction Certificates dated 18.06.2008 issued by the Charted Accountant can be accepted or not? - HELD 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, 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 [2005 (3) TMI 240 - CESTAT, NEW DELHI], it has been held that the Balance sheet cannot be held as sacrosanct document to prove clandestine removal. The demands made in the impugned order on the basis of the difference in Balance Sheet and ER-1 figures is not sustainable. Excess of stock of 2260 kgs. of Master Batch found on physical verification of stock of raw materials on 12.06.2008 - HELD THAT:- It is observed that they have not taken Cenvat credit on the excess quantity of Master Batch found. The Appellant has given the explained that the 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. However, the excess quantity has already been seized and then released provisionally. There is no allegation in the Notice that they have taken any excess credit on account of this excess quantity of master batch found. There is no finding in the impugned order also that the excess quantity has been kept for manufacturing and clearance of the goods clandestinely - the confiscation of the excess quantity of master batch and the redemption fine imposed in the impugned order. Penalty imposed on the Director Shri.S.S. Jindal and the Authorized Representative Shri. B. Kamilla - HELD 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 role of any of the official has not been established in the alleged clearance of goods in respect of the 14 cash memos, the penalty cannot be imposed on them. In view of the above, it is held that the penalty imposed on the Director and 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.
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