2014 (4) TMI 1146 - AT - Central Excise

Demand - Clandestine manufacture and removal of non-alloy steel ingots - there were lying 45 ingots as against the production of only 37 ingots weighing 3.920 M.T.s shown in the log sheet - appellants had increased the capacity of their furnace in December, 2003 from 4 M.T.s per heat to 5 M.T.s per heat - Held that - the revenue in their present appeal has not been able to introduce any evidence to show the clandestine manufacture and clearance of the ingots in question. On going through the impugned order, I find that the appellate authority has passed a detailed order dealing with each and every aspect. In fact, the entire case of the revenue is based upon the sole ground that on the day of visit of the officers, 8 ingots, in excess of the bar heat number of ingots were found lying therein. The charges of clandestine removal, cannot be upheld on the above basis, without any corroborative evidence. - Decided against the Revenue

Summary

Issues: Alleged clandestine manufacture and clearance of non-alloy steel ingots without accountal or payment of central excise duty.

In this case, the appellants were engaged in manufacturing non-alloy steel ingots under Chapter 72 of the Central Excise Tariff Act, 1985. The central excise officers alleged that the appellants had clandestinely increased their furnace capacity and manufactured and cleared non-alloy steel ingots without proper record-keeping or duty payment. The Adjudicating Authority confirmed the duty demand and imposed penalties and interest. On appeal, the Commissioner (Appeals) considered the appellants' contentions and noted the lack of corroborative evidence from the revenue to support the allegations. The Commissioner observed that the demand was based on assumptions and presumptions without sufficient proof. Additionally, the Commissioner accepted the explanation regarding 8 ingots, considering them as rejected/defective ingots from previous production. The lack of verification or investigation by the revenue regarding raw material procurement and sales further weakened the case against the appellants, leading to the appeal being set aside.

The revenue, in their subsequent appeal, failed to provide any new evidence supporting the allegations of clandestine manufacture and clearance of the ingots. The appellate authority's detailed order addressed all aspects of the case, highlighting that the revenue's case relied heavily on the presence of 8 ingots in excess during the officers' visit, which alone was insufficient to prove clandestine removal without additional corroborative evidence. The judgment concluded that the charges could not be upheld solely based on this observation, affirming the Commissioner (Appeals)'s decision. Consequently, both appeals filed by the revenue were rejected, emphasizing the importance of substantial evidence in establishing allegations of clandestine activities in excise matters.