2013 (11) TMI 1167 - AT - Central Excise

Clandestine Procurement of goods - Waiver of pre-deposit Held that - The maximum yield of GAC during the period of dispute was around 38% only - GAC yield could be ascertained with reference to adsorption capacity of the product in terms of CTC - it is claimed, the Coconut Development Board has certified that the output of activated carbon is only one-third of the weight of the shell charcoal - the Revenue has not placed on record adequate material to support the above demand of duty - There seem to have no case that there was clandestine procurement of coconut shell by the appellants Prima facie the appellant has case in their favour thus the pre-deposits to be waived till the disposal stay granted.

Summary

Issues:
Waiver of pre-deposit of duty, Allegation of clandestine removal of goods, Previous Tribunal decision, Maximum yield of granulated activated carbons, Admissibility of evidence, Stay of recovery.

Analysis:
The judgment pertains to an application for waiver of pre-deposit of duty amounting to Rs.18,40,517/- along with interest and penalty. The applicant, a 100% EOU engaged in the manufacture of granulated activated carbons, was accused of clandestinely removing goods based on alleged clearances under duplication of invoices for September 05 and October 05. The advocate representing the applicant argued that previous Tribunal decisions granted unconditional stay on similar issues, emphasizing that the Revenue failed to provide substantial evidence to support the duty demand. The Tribunal acknowledged the Coconut Development Board's certification that the output of activated carbon was significantly lower than assumed by the Revenue, highlighting the lack of concrete evidence of clandestine procurement of raw materials by the appellants during the disputed period.

The Tribunal found a prima facie case in favor of the appellants, noting the absence of adequate material from the Revenue to substantiate the duty demand. Referring to a previous order in the applicant's case, the Tribunal decided to waive the pre-deposit of the entire duty amount, interest, and penalty until the appeal's disposal. The decision was based on the insufficiency of evidence presented by the Revenue to challenge the appellant's claims regarding the maximum yield of granulated activated carbons and the lack of rebuttal on scientific grounds. Consequently, the Tribunal granted the stay of recovery in respect of the duty and penalty amounts, aligning with the earlier decision in the applicant's case and directing the registry to associate the current appeal with the relevant reference.

In conclusion, the judgment highlights the importance of substantial evidence in duty demand cases, emphasizing the need for Revenue to provide cogent scientific material to support their claims. The decision to waive the pre-deposit and stay the recovery was based on the Tribunal's assessment of the evidence presented and the lack of a strong case from the Revenue regarding the alleged clandestine removal of goods by the appellants.