2015 (10) TMI 1785 - AT - Central Excise

Tribunal allows appeal on duty demand due to weighment method variation

The Tribunal allowed the appeal, setting aside the order demanding duty, interest, and penalty for short supply in export consignments of iron ore fines. ... Tolerance of weight variation - weighment by different methods - draft survey versus weighbridge discrepancy - allowance of 1% shortage - reversal of Cenvat creditTolerance of weight variation - weighment by different methods - draft survey versus weighbridge discrepancy - allowance of 1% shortage - Claim for 1% tolerance in weight shortage where goods were weighed by weighbridge at dispatch and by draft survey at export. - HELD THAT: - The Tribunal found on the record that weighment was undertaken by two different methods: weighbridge at the time of dispatch from the factory and draft survey at the time of exportation. It accepted the principle that weighment by different methods (or across different weighbridges) can produce variations in measured weight. Applying that principle to the shortages found on draft survey, the Tribunal held that a 1% variation in weighment is permissible as a tolerance and thus grantable to the appellant. The Tribunal therefore allowed the appellant the benefit of 1% shortage despite the higher shortages observed on draft survey.The claim for 1% tolerance in weight shortage is accepted and the impugned order is set aside; the appeal is allowed with consequential relief, if any.Final Conclusion: The Tribunal allowed the appeal, holding that where weighment is conducted by different methods (weighbridge and draft survey), a 1% variation in measured weight is an acceptable tolerance and must be granted to the exporter; the impugned demand was set aside accordingly. Issues:- Duty demanded for short supply in export consignment- Claim of 1% shortage by the appellant- Reliance on previous case law by the appellant- Acceptance of 1% variation in weightAnalysis:The appellant appealed against an order demanding duty for short supply in export consignments of iron ore fines. The appellant exported two consignments, and discrepancies in weight were found during weighment at the factory and through draft survey on the mother vessel. The appellant argued that variations in weighment methods could lead to discrepancies and claimed a 1% shortage as permissible based on a previous Tribunal decision. However, both lower authorities denied the claim and imposed duty, interest, and a penalty. The appellant contended that a 1% tolerance in weight should be granted due to differences in weighment methods.The appellant's counsel argued that variations in weighment methods could result in discrepancies and requested a 1% tolerance in weight. On the other hand, the respondent's representative opposed the appellant's reliance on a previous case law, citing a decision by the High Court that rejected a similar claim by another party. The Tribunal noted that weighment was conducted using two different methods, leading to variations in weight. Considering this, the Tribunal found the appellant's claim of a 1% shortage acceptable compared to the actual shortages of 1.9% and 4.09% in the consignments exported.The Tribunal concluded that a 1% variation in weighment was acceptable due to the differences in weighment methods employed by the appellant. As a result, the impugned order demanding duty, interest, and penalty was set aside, and the appeal was allowed with any consequential relief. The decision highlighted the importance of considering variations in weighment methods when assessing shortages in export consignments and upheld the appellant's claim of a 1% shortage in the finished goods based on the acceptable tolerance limit.