2013 (12) TMI 1395 - AT - Central Excise

Clandestine clearance of goods PCC poles cleared without paying the duty Held that - The goods which require testing and get consumed during such testing cannot be held to be marketable and hence excisable and duty not required to be paid on the said poles Relying upon Collector of Central Excise v. M/s. Sudershan Beopar Co. Ltd 1992 (8) TMI 190 - CEGAT, NEW DELHI - testing of PCC Poles is essential for making the goods marketable and without such testing the goods cannot be sold - no duty is required to be paid in respect of such Poles which get utilized in the factory for testing purposes - quality control test in respect of cement concrete Poles, being a mandatory requirement before the goods produced could be considered as fully manufactured are not required to discharge duty liability when such cement concrete Poles get destroyed. Failure to maintain records Held that - The appellant have duly entered such PCC Poles in their daily stock account - If there was any mala fide intention on the part of the appellant to clear the said poles without payment of duty, the same would not have been entered by them in the statutory records - no duty liability can be fastened on the appellants in respect of such damage/broken poles - onus to prove the clandestine clearance is on the Revenue, which is required to be discharged by production of sufficient evidence the entire case have been made out on the basis of non-production of records in respect of broken poles Decided in favour of Assessee.

Summary

Issues:
- Duty liability on broken PCC Poles
- Allegation of clandestine removal
- Burden of proof on Revenue

Analysis:

Issue 1: Duty liability on broken PCC Poles
The case involved appeals arising from an order confirming duty demands and penalties on broken PCC Poles. The appellant, engaged in manufacturing PCC Poles, had shown some poles as broken during inspection/testing by Electricity Board representatives. The jurisdictional Superintendent requested documentary evidence of breakage, which the appellant failed to provide. The original adjudicating authority upheld the demands on grounds of clandestine removal due to lack of evidence of breakage during testing. However, the Tribunal referred to precedents stating that goods consumed during testing are not marketable and not excisable, hence duty is not applicable. The appellant's entries in the daily stock register were considered, and it was concluded that no duty liability could be imposed for broken poles.

Issue 2: Allegation of clandestine removal
The lower authorities alleged clandestine removal without substantial evidence beyond the absence of records on broken poles. The Tribunal emphasized that the burden of proving clandestine clearance lies with the Revenue, which was not adequately discharged in this case. The absence of evidence other than non-production of records regarding broken poles led to the rejection of the charge of clandestine removal. The Tribunal highlighted the settled law that the onus of proving clandestine clearance rests with the Revenue and must be supported by sufficient evidence, which was lacking in this instance.

Issue 3: Burden of proof on Revenue
The judgment emphasized the importance of the Revenue bearing the burden of proving clandestine removal. In this case, the entire case against the appellant was based on the non-production of records regarding broken poles. As there was no other evidence supporting the allegation of clandestine removal, the Tribunal found no justification to uphold the charge. The decision to set aside the impugned orders and allow both appeals was made, granting consequential relief to the appellant. The judgment was pronounced on 9-7-2013 by Ms. Archana Wadhwa, J., at the Appellate Tribunal CESTAT NEW DELHI.