2016 (1) TMI 1166 - AT - Central Excise

Clandestine removal of goods - M.S. Angles and M.S. Channels etc. falling under Chapter 72 of the Central Excise Tariff Act 1985 - Held that - the submissions of the appellant regarding burning loss has not been taken into consideration. Further no plausible or credible evidence has been brought on record to prove that the goods have been clandestinely removed. I find from the statement recorded from the Authorized Officer Sh. J.P. Agarwal that nowhere he has stated that the goods have been clandestinely removed from the factory. Since the Department has not properly investigated into the matter in arriving at the conclusion that the discrepancy has resulted in removal of goods clandestinely from the factory I am of the view that confirmation of duty demand confiscation of goods and imposition of penalty by the authorities below are not justified. Therefore the impugned order is set aside and the appeal is allowed in favor of the appellant.

Summary

Issues:
1. Central Excise duty demand due to stock discrepancy.
2. Allegation of clandestine removal of goods.
3. Imposition of penalty and confiscation of goods.

Central Excise Duty Demand:
The case involved a manufacturing unit producing M.S. Angles and M.S. Channels under Chapter 72 of the Central Excise Tariff Act, 1985. Central Excise Officers found a discrepancy during a factory visit, with excess stock of M.S. Angles and a shortage of M.S. Ingots. Subsequently, a show cause notice (SCN) was issued seeking recovery of Central Excise duty for the discrepancy, alleging clandestine removal. The adjudication order confirmed a duty demand on M.S. Ingots, along with interest, and ordered confiscation of excess M.S. Angles with an option for redemption on payment of a fine. Additionally, a penalty was imposed under Section 11AC of the Central Excise Act.

Allegation of Clandestine Removal:
The Commissioner (Appeals) upheld the adjudication order, citing the shortage of M.S. Ingots and excess M.S. Angles as evidence of the appellant's intention for clandestine removal. The appellant's defense of tolerance limit and burning loss was rejected, stating the quantities were too significant for such reasons. The lack of documentary evidence to support the defense further weakened the appellant's case. However, the Tribunal noted that the investigation did not conclusively prove clandestine removal. The statement of the Authorized Officer did not confirm such removal, leading to the view that the duty demand, confiscation, and penalty were unjustified. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

Imposition of Penalty and Confiscation:
The Tribunal's decision to set aside the impugned order also nullified the imposition of penalty and confiscation of goods. The lack of concrete evidence supporting the allegation of clandestine removal led to the conclusion that the penalties imposed were not justified. By overturning the decision, the Tribunal ruled in favor of the appellant, indicating that the authorities had not adequately investigated the matter before confirming the duty demand and imposing penalties.