Order date – 25 August 2022

Facts – 

• The Respondent, M/s. BENGAL BEVERAGES PRIVATE LIMITED, is engaged in the manufacture of aerated water and fruit-based beverages.
• An investigation was conducted by the Anti Evasion Unit of the Central Excise Department and it is alleged that there is mis-match with regard to the quantity of inputs consumed and the stock account of raw materials. 
• Show cause notice dated 27th April, 2017 was issued for the period 2012- 13 to 2015-16 by invoking the extended period of limitation, alleging excess availment of Cenvat credit based on consumption of raw material as per stock account and recovery thereof along with interest and penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Act.
• The assessee submitted their reply stating that they have three units within the same manufacturing complex having single registration and it uses common raw material such as pre-form, essence and sugar in manufacturing aerated beverages and other fruit based drinks in all its units. 
• Further, the assessee stated that for the purposes of excise, all units are treated as one single unit and hence the inter-unit stock transfer is netted off as the same is merely an accounting entry. 
• The assessee stated that the show cause notice is barred by limitation, which were rejected by the adjudicating authority but the appellant tribunal passed an order in favour of assessee.
• Revenue appellant being aggrieved has filed an appeal.

Issue – 

• Whether the Learned Tribunal committed substantial error of law by not holding that there was a mismatch between the consumed quantity of inputs between respondent’s stock account of raw materials i.e. RG 23A Pt. 1 and ER-6 return for the period 2012-13 to 2015-16? 

Order – 

• The Court accepted the order of the Tribunal in which it was pointed out that the department has not objected to the inter unit transfer of input which was the consistent case of the assessee. 
• The Tribunal pointed out that there is inter unit transfer from unit-3 to unit-1 which is included in the total issued quantity of unit-3; whereas the same is shown as inter unit receipt from unit-3 in unit-1 stock account and is also apart of total receipt of unit-1 and thereby the same will also be part of consumption of unit-1 in the column ‘total issue’. 
• Further, the Tribunal was satisfied with the inter unit transfer of raw material as captured by the appellant in the stock account is netted off while filing ER 6 returns as the same is for single excise registration number and all units are treated as one single assessee. Therefore, after being satisfied with the factual position, the Tribunal held that the assessee shown excess consumption of inputs in its stock records cannot be sustained.
• Furthermore, the tribunal had agreed with the submission made on behalf of the assessee that there is no allegation levelled against the assessee showing the excess procurement of inputs and there has been no investigation in this regard by the department. 
• Appeal dismissed.