2010 (9) TMI 563 - AT - Central Excise

Waiver of pre-deposit - Demand along with interest and penalty - The demand of duty is primarily based on the finding of clandestine manufacture and clearance of M.S. ingots by the assessee - This finding, is based on consumption of electricity in excess of certain limit reported by Professor of IIT, based on a technical study of the process of manufacture of M.S. ingots from raw materials such as scrap, sponge iron etc. There is no valid basis for the demand of duty, which is solely based on a preponderance of probabilities - No documentary evidence of production and removal of any unaccounted quantity of finished goods was found - No evidence of consumption of any specified quantity of raw material was found - No evidence was gathered from any buyers - Held that the demand of duty based on probabilities cannot be sustained - The appellant has made out prima facie case for waiver and stay - Hence,the result be waiver of pre-deposit and stay of recovery in respect of duty and penalty amounts.

Summary

Issues:
Demand of duty based on clandestine manufacture and clearance of M.S. ingots by the assessee, reliance on technical opinion report by IIT Professor, mistaken range of energy consumption in show-cause notice, invocation of extended period of limitation, absence of documentary evidence supporting demand, challenge to validity of demand based on probabilities, comparison with previous tribunal rulings, consideration of addendum to show-cause notice, opposition by JCDR based on previous tribunal decision, prima facie case for waiver and stay, interpretation of preponderance of probabilities in demanding duty, comparison with apex court ruling in Collector of Customs v. D. Bhoormal, factual distinctions from Everest Rolling Mills case, waiver and stay of recovery granted.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Mumbai involved a case where M/s. Nasik Strips Pvt. Ltd. was asked to pay a substantial duty amount and penalty for alleged clandestine manufacture of M.S. ingots. The demand was primarily based on a technical opinion report by an IIT Professor regarding energy consumption for ingot production. The show-cause notice mistakenly noted a higher limit of energy consumption, leading to the demand for duty for an extended period. The appellant challenged the demand, arguing lack of concrete evidence and reliance on probabilities. The counsel referenced a previous tribunal ruling to support setting aside the duty demand based on the IIT Professor's report.

The Tribunal noted that the Commissioner's decision was based on a preponderance of probabilities, following a ruling by the apex court in a customs case. However, the Tribunal found similarities with a previous case where duty demand based on the same IIT Professor's report was set aside. The Tribunal distinguished the present case from another case where better evidence supported clandestine clearance of goods. Ultimately, the Tribunal found a prima facie case for waiver and stay, considering the discrepancies in the technical opinion report and the lack of substantial evidence supporting the duty demand.

In conclusion, the Tribunal granted waiver and stay of recovery for the duty and penalty amounts, including the penalty imposed on the Managing Director of the company. The decision was based on the lack of concrete evidence supporting the duty demand and the discrepancies in the technical opinion report, as well as the similarities with a previous tribunal ruling that set aside a duty demand based on the same report.