2012 (12) TMI 45 - AT - Central Excise

Demand shortage of scrap manufacturer sent the goods for job-work. After the completion of job-work the goods and scrap is returned to the appellant alleged that they have cleared the aluminium and brass scrap on the ground that the appellant has mixed the case and sold at a lesser value Held that - They received and keep stock of scrap in a contention can be mixed manner under the head of iron and steel scrap. Their accepted because the scraps in question are highly valued in comparison to iron and steel scrap. It is not feasible that these are treated in such a cheap manner by business people. Separate customers and separate foundries exist to deal with scraps of separate metals. Further, the stock taking report shows that the different scraps were found and weighed separately. Hence receipt in mixed condition, keeping stock in mixed condition under the head of iron and steel scrap etc are afterthought only - department could not produce any evidence in respect of lesser value of scrap and the whole case is based on assumption and presumption. No investigation whatsoever has been carried out from the purchasers - appeal is allowed

Summary

Issues:
- Appeal against Order-in-Appeal
- Allegation of shortage of scrap
- Allegation of undervaluation of scrap
- Lack of evidence presented by the department
- Presumption and assumption as basis for decision

Analysis:
The appeal was filed against Order-in-Appeal No. 16/Koli-V/2011, where the Commissioner (Appeals) allowed the appeal by Revenue, setting aside the lower adjudicating authority's order. The case involved the appellant, engaged in manufacturing steel products, who sent goods for job-work and faced allegations of shortage and undervaluation of scrap by the departmental officer. The lower adjudicating authority dropped the demand for lesser value of scrap but affirmed the proposal for shortage of scrap. The Revenue appealed before the Commissioner (Appeals) specifically on the issue of lesser value of scrap.

The Commissioner (Appeals) upheld the Revenue's appeal, leading to the current appeal by the appellants. The appellant contended that the decision was based on presumption and assumption, as no concrete evidence was presented by the department to prove undervaluation of scrap. The department failed to produce any evidence regarding the alleged undervaluation, relying solely on presumption and assumption. The appellant argued that separate customers and foundries deal with scraps of different metals, implying that the scraps in question were not undervalued.

Upon review, it was found that the department had not conducted any investigation with the purchasers to substantiate the claim of undervaluation. The entire case was based on assumption and presumption, lacking factual evidence. The Commissioner (Appeals) was criticized for not having a sustainable order due to the absence of concrete evidence. Consequently, the order-in-appeal was set aside, and the appeal was allowed with any necessary consequential relief as per the law. The judgment highlighted the importance of evidence-based decision-making rather than relying on presumption and assumption in such cases.