Excise Duty Cannot be Demanded Merely based on difference in Sales Figures between Balance sheet and Excise Returns: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the excise duty cannot be demanded merely based on differences in sales figures between balance sheets and excise returns. The Bench held that the mere difference between the balance sheet and excise returns was not enough to demand the excise duty. 

Pratap Polysacks Ltd, the appellant assessee was engaged in the manufacture of HEPE/PP Sacks, Woven Fabric (both laminated and un-laminated) woven sacks (both laminated and un-laminated) liner and cut pieces and the assessee appealed against the order passed by the adjudicating authority for confirming the demand of excise duty and imposition of redemption fine for confiscation of goods along with the interest. 

N.K.Chowdhury, the counsel for the assessee contended that the demand made by the department specifically about the alleged differences between the figures appearing in the monthly Excise Return register and those reflected in the Schedules to the balance sheet. 

Further submitted that the quantities of the clearance figures declared in the monthly return and the figures mentioned in their Excise return are correct and while preparing the balance sheets, there were certain apparent mistakes, and such mistakes were later corrected by proper Certificates issued by the Chartered Accountants. 

S. Mukhopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the demand for excise duty was made as per the law and based on the difference in the balance sheet and excise return. 

The Bench observed that the excise duty cannot be demanded merely based on the difference in sales figures found between the balance sheet and the Excise Returns and there must be some positive evidence brought on record to substantiate the allegation of clandestine clearance. 

Also held that a mere allegation of shortage based on the difference in sales figures found between the balance sheet and the Excise Returns, cannot be the basis for confirming the central excise duty on the differential quantity. 

The two-member bench comprising Ashok Jindal (Judicial) and K.Anpazhakan (Technical) quashed the demand for excise duty made by the adjudicating authority while allowing the appeal filed by the assessee. 

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