Actual consumption records defeated average-weight excise demand, and the penalty fell with the duty dispute.

CESTAT, New Delhi held that central excise duty could not be sustained on an average-weight basis where the assessee maintained contemporaneous records of receipt, issue, closing balance and actual consumption of tin plates used in job-work manufacture of tin containers. Because the actual receipts and balances in the private records were not disputed, the assessable value could not be recomputed by substituting estimated averages for recorded consumption. The differential duty had also been paid before the show cause notice after the mistake was pointed out. On these facts, the duty demand and the penalty were set aside.

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Issues: Whether the demand of central excise duty could be sustained by adopting an average weight basis for tin plates instead of the actual consumption recorded by the assessee, and whether the penalty imposed could survive.

Analysis: The assessee maintained contemporaneous records showing receipt, issue, closing balance, and actual consumption of tin plates used in the manufacture of tin containers on job work basis. The actual receipt of tin plates and the balances reflected in the private records were not disputed. In such circumstances, the assessable value could not be recomputed on the basis of an average weight of containers or inputs, when the records showed actual consumption. The differential duty relating to a calculation mistake had also been paid before the issuance of the show cause notice after the mistake was pointed out.

Conclusion: The duty demand based on average consumption was unsustainable and was set aside, and the penalty was also set aside. The appeal was allowed.

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