Reconciliation of petroleum duty demand failed for lack of findings; demand and penalty were set aside and remanded.

Differential duty demand on petroleum products cleared after withdrawal of the in-bond warehousing arrangement under Notification No. 17/2004-CE (NT) was found unsustainable on the existing record because the assessee had produced reconciliation statements, annual accounts and transit-loss data, yet the adjudicating authority gave no specific finding on why that material was unacceptable. Reliance on an earlier adjudication that had already been set aside was also inappropriate without independent examination of the fresh material filed in remand proceedings. The demand and penalty were set aside, and the matter was remanded for fresh decision after considering the reconciliation details and granting a personal hearing.

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Issues: Whether the demand of differential duty arising from withdrawal of in-bond movement of petroleum products without payment of duty was sustainable when the assessee had produced reconciliation statements and claimed payment of differential duty.

Analysis: The dispute turned on the effect of the withdrawal of the warehousing/in-bond arrangement under Notification No. 17/2004-CE (NT) and the reconciliation method adopted for petroleum products cleared through pipelines and other modes. The record showed that the assessee had furnished statements and reconciliation details, including annual accounts and transit-loss related data, yet the adjudicating authority did not record specific findings on why such reconciliation was unacceptable. The order also relied on findings of an earlier adjudication which had already been set aside, without independently examining the fresh material placed in remand proceedings.

Conclusion: The demand and penalty were set aside and the matter was remanded to the adjudicating authority for fresh decision after considering the reconciliation details and granting personal hearing.

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