2010 (4) TMI 959 - AT - Central Excise

Summary

Issues involved: Appeal against the order of the Commissioner (Appeals) setting aside the lower Adjudicating Authority's order on recovery of duty u/s Rule 173Q of erstwhile Rules read with Section 11AC of the Central Excise Act, 1944 based on reprocessed brown sugar shortages in seasons 1994-95 and 1996-97.

Details of the Judgment:

1. Department's Contention:
- Department argued that reprocessing losses in this case were significantly higher than a previous case, indicating possible clandestine removal.
- Even if the test report was not received earlier, the show-cause notice could be issued within 5 years due to suspicions of clandestine removal.

2. Respondent's Contention:
- Respondent claimed they did not suppress evidence and informed the department about the sugar shortage when reprocessing.
- Argued that abnormal losses were due to reprocessing and not clandestine removal, supported by the Commissioner (Appeals)'s acceptance of their reasons.

3. Analysis and Decision:
- Tribunal noted the department's focus on sugar yield but highlighted the absence of discussion on molasses production during reprocessing.
- Commissioner (Appeals) rightly applied a previous decision's ratio, considering the respondent's explanations for losses.
- Department's failure to obtain the test report directly from CRCL weakened their argument of non-disclosure by the respondent.
- Lack of evidence supporting clandestine removal led to the dismissal of the Revenue's appeal.
- Commissioner (Appeals) provided a well-reasoned conclusion, which the department failed to challenge effectively.

Conclusion:
The Tribunal upheld the Order-in-Appeal, dismissing the Revenue's appeal due to the lack of merit in proving clandestine removal and the strength of the Commissioner (Appeals)'s findings.