By TIOL News Service

KOLKATA, JUNE 27, 2013: THE Applicant are engaged in the manufacture of iron and steel products and during the course of manufacture of the said goods, 'molten slag' emerges as a by-product. From the said molten slag, 'granulated slag' is manufactured by them, which is classified under Chapter Sub Heading 26180000 of CETA, 1985 and cleared on payment of duty.

In their operational statistical report, for the Financial years 2004-05 to 2007-08 the total clearance of 'granulated slag' was shown as 9,33,117.00 MT, whereas in the relevant ER-1 Returns, the quantity cleared was shown as 2,41,802.868 MTs.

The Revenue has issued a demand alleging that the difference in quantity between the said Report and the ER-1 Returns, were clearances without payment of duty. Explaining the apparent difference in the said two documents, the appellant submitted that by an agreement dated 22.06.2006, 70% of the molten slag generated in the factory of the Applicant had been sold to M/s. ACC, DCSL, a company situated within the same factory premises, for conversion of molten slag, into granulated slag. The balance quantity, had been converted by the Applicant into granulated slag on which duty had been discharged and shown in the relevant ER-1 Returns. It is his contention that due to the mention of the clearances of 'granulated slag' made by M/s. ACC, DCSL during the said period, in their Annual operational statistical report, had resulted into the present confusion. He has further submitted that except the said difference in the figures, there is no other evidence of removal of granulated slag had been produced by the Department.

Tribunal found that the duty has been demanded by the Revenue on the sole ground of difference between the quantity of the granulated slag shown in their Annual Operational Statistical Report and the quantity shown in the monthly ER-I Return filed by the Applicant during the period from July, 2004 to March, 2008. There is no other evidence of removal of goods from the factory, except the difference in the said two statements. The Applicant placed reliance on the agreement between them and M/s. ACC, DCSL, wherein they were obliged to sell around 70% of molten slag generated in the factory. Also, it is not in dispute that M/s. ACC, DCSL is situated with in the same factory premises of the Applicant, as is appearing in the agreement dated 22.06.2006. Besides, it is also not in dispute that M/s. ACC, DCSL, cleared the granulated slag on payment of duty.

Thus, prima facie, at this stage, without any corroborative evidence, it would be difficult to accept the difference in the quantities of granulated slag between the two statements, were the quantity cleared without payment of duty.

Accordingly, the requirement of pre-deposit of dues adjudged is waived and its recovery stayed during pendency of the Appeal. Stay Petition is allowed.

(See 2013-TIOL-968-CESTAT-KOL)