2012 (5) TMI 525 - AT - Central Excise

Duty demand - Suppression of production - Clandestine removal of goods - Contravention of the provisions of Rules 4, 6, 8, 10, 11 & 12 of the Central Excise Rules, 2002 - Held that - Demand is based only on a single parameter i.e. input output ratio. Further the input output ratio of the year 1999-2000, has been adopted for working out the demand for the period January, 2008 to December, 2008. We also find that the show cause cum demand notices raised for the earlier and subsequent period to the present demand, have also been set aside - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of demand of duty along with interest and penalty under Section 11AC of the Central Excise Act, 1944 based on alleged suppression of production and clandestine removal of goods.
2. Contention regarding similar proceedings for other periods being decided in favor of the assessee.
3. Challenge against the adoption of input output ratio from the year 1999-2000 for calculating the demand for the period January 2008 to December 2008.

Analysis:
1. The appellant appealed against the confirmation of demand of duty, interest, and penalty under Section 11AC of the Central Excise Act, 1944, amounting to Rs. 4,84,13,471/-, based on the alleged suppression of production and clandestine removal of goods. The appellant contended that the demand was raised solely on the basis of assumption and presumption without tangible evidence, challenging the validity of the Order-in-Original. The ld. A.R. for the Revenue supported the findings of the ld. Commissioner. The Tribunal noted that the demand was solely based on the input output ratio from the year 1999-2000 and found that similar show cause cum demand notices for other periods had been set aside. Citing relevant case law, the Tribunal held that the demand based only on the input output ratio was not sustainable, setting aside the Order-in-Original and allowing the appeal.

2. The appellant argued that similar proceedings for other periods had been decided in favor of the assessee, citing specific cases and decisions by the Tribunal and the Hon'ble High Court of Bombay. The appellant contended that the demand for the period in question was raised on a single parameter, the input output ratio, without considering the variations in the manufacturing of different types of beverages by the appellant. The Tribunal considered the appellant's contentions and the precedents cited, ultimately concluding that the demand solely based on the input output ratio from a different year was not justifiable, especially considering the outcomes of similar proceedings for other periods.

3. The appellant challenged the adoption of the input output ratio from the year 1999-2000 for calculating the demand for the period January 2008 to December 2008. The appellant argued that the input output ratio from a different year could not be uniformly applied due to variations in the manufacturing process of different types of beverages. The Tribunal analyzed the appellant's contentions, the precedents cited, and the specific facts of the case. Considering the lack of tangible evidence supporting the demand and the inconsistencies in applying the input output ratio, the Tribunal found the Order-in-Original unsustainable and set it aside, allowing the appeal in favor of the appellant.