Discrepancies in Duty Demand Resolved: Tribunal Allows Appeal

The appeal involved a dispute over duty demand arising from discrepancies between the appellant's 3CD returns and RG-1 daily stock account. The appellant's counsel presented a reconciliation statement explaining differences in figures, citing a Tribunal decision to support their argument. The Tribunal found the appellant's explanation credible, noting significant differences in recording criteria between the Balance-sheet and ER-1. Relying on the Tribunal's decision in a similar case, the impugned order was set aside, and the appeal was allowed by the Appellate Tribunal CESTAT MUMBAI on 29.07.2016.

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Issues:
Demand of duty based on discrepancies between 3CD returns and RG-1 daily stock account.

Analysis:
The case involved a demand of duty on the variance between finished goods reported in the appellant's 3CD returns and the RG-1 daily stock account. It was alleged that the appellant had discrepancies in the quantity of clearance reported in their ER-1 returns compared to the quantity of sale mentioned in the Balance-sheet for the year 2005-06. A demand of &8377; 1,01,522/- was raised and confirmed by the lower authorities.

The appellant's counsel presented a reconciliation statement showing differences in figures between the Balance-sheet and ER-1 due to trading (export), labour charges, and short quantity received during dispatch. The counsel argued that the criteria for recording production value in the Balance-sheet differed significantly from that required in ER-1. Reference was made to a Tribunal decision in the case of Composite Boards (P) Ltd. to support this argument.

The respondent's representative relied on a decision of the Hon'ble High Court of Punjab & Haryana in the case of Martin & Harris Laboratories Ltd. and supported the impugned order. However, the Tribunal noted that the decision in Martin & Harris Laboratories Ltd. was made when the assessee's explanation was not accepted, and the criteria for recording sales production in the Balance-sheet differed significantly from that in ER-1. In the present case, the appellant provided reconciliation figures showing variances due to trading, labour charges, and short quantity received, which were not disputed. Citing the Tribunal's decision in Composite Boards, the impugned order was set aside, and the appeal was allowed.

The judgment was pronounced on 29.07.2016 by Shri Raju, Member (Technical) at the Appellate Tribunal CESTAT MUMBAI.

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