2014 (5) TMI 909 - AT - Central Excise

Duty demand - Clandestine removal of goods - Shortage of asbestos sheets - Held that - entire case of the Revenue is based upon the fact that waste which generates during the manufacture of asbestos sheets as also during further course of reclamation (for which the appellants have produced figures) stand cleared by the appellant in a clandestine manner and the duty stand confirmed in respect of such shortages on the allegations that same stand cleared clandestinely. Apart from the fact that said waste cannot be held to be dutiable, I also find that apart from the fact that shortages which stand admitted by various persons in their statements recorded during investigation, there is virtually no evidence on record to show that the said waste stand cleared by the appellants in a clandestine manner. From the photos produced before me, it is seen that said waste is in the nature of small piece of asbestos sheets and stand spread in and around the premises, in which case, it will not only be difficult but impossible to weigh the same. Otherwise also, I also find that in the absence of any evidence to show clandestine removal of the same, which in any case were not excisable, confirmation of demand against the assessee cannot be up-held - Following decision of Raj Ratan Industries Ltd. vs. CCE, Kanpur 2012 (6) TMI 72 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues:
1. Shortage of asbestos sheets in stock detected during inspection.
2. Allegations of clandestine clearance leading to demand of duty and penalties.
3. Contention regarding the nature and disposal of waste asbestos sheets.
4. Lack of evidence for clandestine removal of waste and duty liability.

Analysis:
1. The appellant, engaged in manufacturing asbestos cement sheets, faced shortage of 1073.551 MT of waste asbestos sheets during an inspection. The Deputy Manager accepted the shortage without explanation and deposited the duty leviable under protest.
2. Proceedings were initiated against the appellant for allegedly clearing the waste in a clandestine manner. The show cause notice proposed duty demand confirmation and penalty imposition, leading to the order by the adjudicating authority, upheld by the Commissioner (Appeals), prompting the present appeal.
3. The appellant argued that the waste asbestos sheets, which have no commercial value, are dumped within the factory premises and used for various purposes. They contended that the demand was based on shortages of waste that cannot be weighed due to their nature and disposal method.
4. The Tribunal found the Revenue's case relying on waste clearance in a clandestine manner unsubstantiated. There was no evidence of clandestine removal of waste, which was not an excisable item. The inability to weigh small pieces of waste scattered around the premises further supported the decision. Citing a previous case, the Tribunal set aside the impugned order and allowed the appeal, providing relief to the appellants.