2026-VIL-676-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Demand based on discrepancies between the figures of inputs as reflected in balance sheet and RG-23A Part I and physical stock - Denial of CENVAT credit based on discrepancies between balance sheet and statutory records - Whether the appellants are liable to reverse the CENVAT Credit on the basis of the discrepancies between the figures of inputs as reflected in balance sheet and RG-23A Part I and physical stock as on 04.04.2001 – HELD - The balance sheet is foreign material for Central Excise Act, 1944 and is not a foolproof evidence for central excise purposes. The Revenue has to bring further cogent evidence to prove the allegation that the inputs were only gathered merely on paper for availing credit and have not undergone consumption. The ld. Commissioner has missed out on the fact such an attempt to reconcile was not consequent to the detection and issuance of show cause notice by the Revenue. Rather, it was well before and precisely in the nearest time frame to the closure of financial year. Therefore, it is not correct on the part of the adjudicating authority to impute that the appellants have attempted to cover up the shortages by making the debit entries – Further, no evidence of suppression of purchase and clandestine manufacture/ removal has been placed on record. The adjudicating authority was directed to reconcile the discrepancy on the basis of the submissions made by the appellants. However, the impugned order failed to adhere to the directions of the Tribunal and relied on the discrepancies found during a physical verification conducted in 2001, which was not relevant for the earlier years. The present proceedings were without jurisdiction as the provision Rule 12 of CENVAT Credit Rules was not applicable during the relevant period when the alleged discrepancy occurred - The impugned order cannot be sustained on merits, limitation and on legal points. Accordingly, both the appeals are allowed
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