2013 (10) TMI 712 - AT - Central Excise

Tribunal decision on duty demand and service tax credit appeal with penalty reduction

The tribunal found the appellants failed to prove a prima facie case for duty on the unaccounted 227.86 MT of scrap salvaged from a sunken ship. The ... Waiver of Pre-deposit - Duty Demanded – difference in closing balance and opening balance - salvage of ship - scrap on the ship - Held that:- The payments already made by the appellants is towards admitted liability and interest thereon - this amount cannot be taken into consideration while determining the amount of pre-deposit required to be made by the appellants - appellants have not been able to make out a prima facie case in their favour - It is difficult to imagine how an assessee would not notice that quantity of 227.86 MT was not at all available to show it in the ER-1 return when no stock was available - One would expect that appellant would have informed the department as to how the closing balance or opening balance shown in the ER-1 returns were wrongly shown and why they were shown in that manner. The mistake becomes multiplied when we notice the fact that appellant had informed the Pollution Control Authorities and Port Authorities about the salvage activities but failed to inform the Customs Authorities or Central Excise Authorities to whom the returns were filed - the departmental officers cannot be found fault with for going by the documents submitted by the appellant - If the documents submitted showed a closing balance of 227.86 MT in the month of May and it became zero as opening balance in the month of June, prima facie the appellant may be required to pay duty on this amount. Goods Transport Agency Service – it was contended that we have to go by agreement and we cannot go only by the invoice - This would require examination of the agreement vis-a-vis invoices issued and etc. which can be done at the final stage - Therefore at this stage the benefit can go to the assessee - the appellant is directed to deposit an amount as pre-deposit – Partial stay granted. Issues:1. Quantity discrepancy in scrap salvage.2. Education cess and CENVAT credit liability.3. Irregular credit availed on outward freight.4. Prima facie case for duty on scrap.5. GTA service tax credit eligibility.6. Penalty on the Accounts Officer.Analysis:1. The appellants filed a bill of entry for 500 MT of scrap salvaged from a sunken ship, but discrepancies arose as they claimed only 273 MT was salvaged, not the estimated 500 MT. They rectified errors in education cess and CENVAT credit but still owed amounts related to scrap and outward freight. The appellant argued the salvage quantity was lower due to the ship's condition, denying clandestine removal. The tribunal found the appellants failed to prove a prima facie case for duty on the unaccounted 227.86 MT, as they should have corrected the discrepancy earlier, leading to a duty demand on this amount.2. Regarding the GTA service tax credit, the appellant contended that despite the invoice mentioning the shipyard as the place of removal, the goods were actually removed from a consignment agent's location, making them eligible for the credit. The tribunal agreed to consider the agreement details at a later stage, granting the benefit of doubt to the appellant for now.3. The Accounts Officer faced a penalty for failing to understand legal obligations, with the penalty reduced to Rs. 50,000. The tribunal directed the appellant to deposit Rs. 3,37,962 within 8 weeks, with compliance to be reported by a specified date. Upon this deposit, the pre-deposit requirement for the balance dues and the Accounts Officer's penalty were waived, granting a stay on recovery during the appeal process.