ORDER
U.L. Bhat, J. (President)
1. This is an application seeking rectification of mistakes said to have arisen in Final Order No. 660/95-A, dated 3-11-1995 disposing of Appeal No. E/593/93-A. We have heard both sides. The ROM application itself is voluminous one. However, the learned Counsel for the applicant has restricted submissions to mistakes said to have been committed on two counts, namely, the alleged shortage in stock of raw materials STPP and Soda Ash and inferences arising therefrom and the finding regarding the inclusion in the assessable value of transportation charges collected by the appellant from the buyers. The first aspect has been discussed in the final order in Paragraphs 2 and 3 and the second point has been considered in Paragraphs 5 and 6.
2. At the hearing of the appeal, learned Counsel for the appellant challenged the conclusion drawn from the proved fact of substantial shortage of raw materials and stated that the quantification was approximate and not actual. In considering these submissions, we referred to the statement of Shri Brij Mohan; an employee of the appellant which showed that 318 bags of STPP each of 50 kgs. were found short as also 21375 kgs. of Soda Ash and there was no material to indicate that there was any error in arriving at the total quantity of shortage. We also rejected the contention that STPP and Soda Ash materials were minor ingredients.
3. It is now pointed out that our reference to the data shown in the statement of Brij Mohan is not correct and the relevant figures have not been correctly placed before us. The Panchnama and the show cause notice specifically referred to shortage of 3210 kgs. of STPP and 2175 kgs. of Soda Ash, total being 5385 kgs. The show cause notice also alleged that the ratio of raw material to finished products in the appellant’s factory was 668 kgs. of raw materials to 660 kgs. of finished goods in one batch. The show cause notice further alleged that 38520 kgs. of finished products would have been manufactured out of the raw materials found in shortage and the value thereof was to be added on the ground that such products manufactured had been clandestinely removed. Our attention is presently drawn to the circumstance that if the total shortage of the two raw materials was to the extent of 5385 kgs. adopting the ratio referred to in the show cause notice, the excess finished goods manufactured must be around 5300 kgs. and as a matter of fact, the searching officers found 3964 kgs. of excess stock in the factory. Our attention is also invited to the discrepancies between 2175 kgs. of Soda Ash referred to in the Panchnama and the figures found in the statement of Brij Mohan. Brij Mohan was asked to explain the stock of 19110 kgs. of STPP found as per stock register and the actual quantity of 15900 kgs. found on verification and similar entries of 33550 kgs. and 21375 kgs. of Soda Ash and he could not account for the discrepancies. Going by these figures, it is contended that the deficit of STPP was only 3210 kgs. and the deficit of Soda Ash was 12175 kgs. and the latter figure does not tally with the figure mentioned in the Panchnama and the show cause notice. Since our pointed attention was not drawn to these features in the case, we rejected the contention [addressed] in regard to the shortage of raw materials and inferences to be drawn therefrom. In these circumstances, we are inclined to agree that there is a mistake committed with regard to the shortage of quantity of raw materials and inferences to be drawn therefrom. Since these features were not adverted to by the adjudicating authority, we are of opinion that the matter has to be reconsidered by him.
4. On the question of freight charges, the argument advanced at the stage of hearing was that certain freight charges had been collected by the appellant from the wholesalers M/s. Santosh Trading Company and such charges had been wrongly added to the assessable value. It is now pointed out that this did not reflect the correct position. The allegation in the show cause notice was that while the appellant collected the transportation charges from the dealers as per bills, the appellant did not meet the cost of transportation, thereby suggesting that the cost of transportation was being met by the wholesaler who was taking delivery of the goods at the factory and arranging distribution to the various dealers and the defence of the appellant to the show cause notice was that as per the agreement between the appellant and the wholesaler, the wholesaler was to meet the expenses and was to be reimbursed subsequently by the appellant and the adjustment of amount was to take place at intervals of six months and that accordingly while initially the transport was arranged and the expenses were being met by the wholesaler, at the end of six months credit was given by the appellant to the wholesaler for the expenses so incurred. The matter in this perspective was not presented before us at the hearing of the appeal. We also relied on the statement of one of the partners of the wholesaler admitting that the wholesaler had been paying the freight charges and the same had not been returned to the wholesaler by the appellant. Our attention was not drawn to the circumstance that the statement was recorded on 15-1-1992, very well within the period of three months from the date of the agreement and as per agreement adjustment had to be done only at intervals of six months. Our attention was also not drawn to the circumstance that the appellant had written a letter dated 1-8-1992 to the wholesaler indicating that a sum of Rs. 1,60,735.00 had been credited to the account of the wholesaler on account of freight, transportation charges, etc. and that an affidavit had been filed before the Collector asserting that the amount expended by the wholesaler had been reimbursed to him. At the hearing of the appeal, our pointed attention was not invited to the circumstance that the agreement contemplated adjustment of amount at intervals of six months and that the appellant had put forward before the Collector contention that after the statement of Brij Mohan was recorded, the amount had been returned by way of credit entry in the accounts. Since the contention and the subsequent credit entry had been put forward before the Collector, he should have considered the same. Since this would involve verification of account not only of the appellant but also of the wholesaler, it would be appropriate that the matter should be reconsidered by the Collector.
5. One incidental matter which arose for consideration at the hearing of the appeal related to the claim for Modvat credit. The Collector had directed reversal of Modvat credit in respect of the duty paid on the inputs found in shortage. The Collector had also protected the interest of the appellant by directing that against payment of excise duty levied, Modvat credit for the raw materials found in shortage will be adjusted. Therefore, we did not find any ground to interfere in that regard.
6. In the circumstances referred to above, we recall Final Order No. 660/95-A, dated 3-11-1995 and set aside the impugned order and remand the case to the jurisdictional authority or other appropriate authority for decision afresh after granting the appellant an opportunity of personal hearing and after verification-of the correctness of the submissions referred to above and the submissions which may be made at the personal hearing. The application is allowed.