2005 (5) TMI 508 - AT - Central Excise

Summary

Issues:
- Allegation of removal of cement without paying Central Excise duty
- Contention of manufacturing loss during production
- Commissioner's finding on quantity of loss allowed
- Acceptable percentage of manufacturing loss
- Evidence required to prove clandestine removal

Allegation of Removal of Cement without Paying Central Excise Duty:
The case involved the appellant, a cement manufacturer, facing show cause notices alleging removal of cement without paying Central Excise duty. The notices were based on discrepancies between the quantity of cement accounted for and the total raw materials consumed. The Dy. Commissioner confirmed the duty demand and imposed penalties, which the appellant contested, leading to an appeal before the Commissioner.

Contention of Manufacturing Loss during Production:
The appellant argued that the alleged discrepancies were due to manufacturing losses during the production process, with no actual removal of unaccounted quantities. The Commissioner acknowledged the absence of evidence supporting clandestine removal but upheld the duty demand on grounds of short accounting of goods to evade duty payment. The appellant relied on legal precedents emphasizing the need for tangible evidence to prove clandestine removal, highlighting the lack of such evidence in this case.

Commissioner's Finding on Quantity of Loss Allowed:
The Commissioner determined the quantity short accounted by considering a manufacturing loss of 0.02% as acceptable, citing a previous Tribunal decision. The appellant challenged this finding, asserting that the Tribunal decision did not establish a standard percentage for acceptable loss.

Acceptable Percentage of Manufacturing Loss:
The appellant argued that manufacturing losses are inherent in production processes, citing a Supreme Court judgment recognizing such losses. The appellant contended that the duty demands lacked factual basis and should be set aside, as there was no evidence of excess production or clandestine removal.

Evidence Required to Prove Clandestine Removal:
The judgment emphasized the necessity of concrete evidence to prove clandestine removal, citing legal precedents that highlighted the need for corroborative evidence. The Tribunal rejected the Commissioner's findings of short accounting without factual basis, emphasizing that duty demands cannot be sustained on presumption alone. The judgment ultimately set aside the impugned order, allowing the appeals and relieving the appellant of penalties.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by the parties, legal principles applied, and the final decision rendered by the Tribunal.