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2015 (10) TMI 1555 - CESTAT NEW DELHI

2015 (10) TMI 1555 - CESTAT NEW DELHI - 2015 (330) E.L.T. 681 (Tri. - Del.) - Denial of CENVAT Credit - whether or not the accounting errors as claimed by the assessee resulted in certain short payment of duty on finished goods and availment of irregular credit on certain inputs. - held that:- While the whole discrepancy in physical stock has come to light only as per the stock taking conducted by the assessee, there is no allegation or evidence to the effect that the shortages/excesses are not .....

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e in the facts and circumstances of the present case. - physical inventory was in fact done by the assessee and the Revenue came into the picture much later. In any case, the nature and possibility of accounting error not being denied the adjustment as ordered by the Commissioner on the clear reasoning cannot be faulted. We find that remand of the case on this ground will not serve any purpose. - Decided in favour of assessee. - Excise Appeal No.2832 of 2011 with Misc. Application No. 51230 of 2 .....

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duty. They are availing credit of inputs and capital goods. They manufactured wide varieties of Ball Bearings and claimed to deal with 1,40,000 different types of raw materials, work-in-progress goods, finished goods, stores and supplies taken together. They have conducted audit of their inventory of all items namely inputs in stock, goods-in-process, and finished stock. During the course of such verification they found certain shortages and certain excesses in respect of various inputs as well .....

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anded duty of ₹ 2,39,048/- on the finished goods found excess. Aggrieved by this order of the learned Commissioner, both the assessee as well as Revenue are in appeal before us. 2. The assessee appeal is to the effect that in large scale operation of inventory management these shortages and excesses in both raw material and finished product cannot be eliminated and such shortage/excess which are very small compared to the volume and complexity of operation cannot legally lead to a conclusi .....

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how much of finished goods manufactured. In actual process the exact numbers of finished goods are quantum of raw material will not all the time match with the default information fed into the SAP system. The assessee elaborately discussed in their appeal with illustration about the possibility of shortages or excesses arising in the situation where large numbers of variants are dealt by during the manufacturing process. They have also elaborated that various reasons which could result in the va .....

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yment of duty or take wrong credit of such a small amount. The variations, if any, are solely attributable to the large scale operation and complexity of accounting. Such shortages and excess are well within the reasonable limit and as long as there is no allegation or evidence to the effect that there is an unaccounted clearance there could be no question of short levy or reversal of credit on goods. 3. The Revenue is on appeal against the impugned order on the ground that the learned Commissio .....

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is that whether or not the accounting errors as claimed by the assessee resulted in certain short payment of duty on finished goods and availment of irregular credit on certain inputs. The learned Counsel for the assessee reiterated the grounds mentioned in their appeal and pleaded that the basis and the nature of accounting errors which are inevitable in the nature of operation undertaken by the assessee is well explained and the same cannot be discounted. He emphasized that considering the vo .....

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duty on excess final product. 5. The admitted facts of the case are that the assessee is having computerized accounting which manages end to end operations i.e. from the set of procurement of raw material to sale of finished goods. It is also admitted fact that there are large varieties of raw materials, work-in-progress and finished products. The consumption of raw material goods which are used in process of making and the finished goods are not physically numbered and accounted on day-to-day .....

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wer authority and he allowed the possibility of shortages and excesses in respect of various individual category of raw materials and finished goods. However, he confirmed the reversal of credit in respect of raw material found short after netting of excess with shortage among various varieties. Same method has been adopted for finished goods also. We find that the shortages and excesses found during physical stock verification which remained un-reconciled are within the tolerance limit keeping .....

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