2014 (10) TMI 88 - AT - Central Excise

Clandestine removal of goods - Lack of evidence - Whether appellants have diverted the imported tubes as clandestinely or used the same for remelting and making of copper tubes of higher dimensions - Held that - during stock taking of the factory premises of the main appellant, no grave discrepancies were found and Commissioner has not disputed that imported copper tubes can be remelted to make out higher diameter tubes - even if there is no evidence of clandestine removal of pipes still he is holding that appellant is not able to justify their claim of remelting of imported copper pipes conclusively. It is also observed that adjudicating authority has found such practice of issuing copper pipes for remelting was in vogue during the period April 2007 to September 2007. There is no evidence like seizure of clandestinely removed imported copper pipes or extra raw material acquired by the main appellant for manufacturing higher diameter copper pipes/tubes. The statements of the Chairman and Authorised signatory of the main appellant also do not say anywhere that the imported copper tubes have been diverted clandestinely. Though the initial statement of Shri Sanjay Mardia recorded by the investigation team convey that he was not able to properly convey as to how imported copper tubes were dealt, but it is well settled law now that few statements, which are not corroborated by other evidences and were subsequently retracted, cannot be the sole basis for quantification and confirmation of demand on clandestine manufacture and clearance of the final excisable goods. Appellants have, therefore, made out a prima facie case for full waiver of the confirmed dues and penalties. - Stay granted.

Summary

Issues:
1. Stay applications filed by the appellants challenging OIO No.VAP-EXCUS-000-COM-061-13-14 passed by Commissioner of Central Excise Customs & Service Tax Commissionerate, Vapi.
2. Allegation of clandestine removal of imported copper pipes by the main appellant.
3. Claim of remelting imported pipes to make higher diameter pipes by the main appellant.
4. Confirmation of demand, interest, and penalties against the main appellant and individuals.
5. Arguments presented by both sides regarding the diversion of imported pipes.
6. Financial hardship plea by the main appellant due to accumulated losses.

Analysis:
The appellants filed stay applications against the OIO confirming a demand of Rs. 3,13,35,656/- along with penalties imposed on the main appellant and individuals. The main issue revolved around the alleged clandestine removal of imported copper pipes by the main appellant. The appellant's advocate argued that the imported pipes were remelted to make higher diameter pipes due to market price fluctuations in copper. He emphasized the lack of evidence supporting the allegation of clandestine removal and highlighted the financial hardship faced by the unit. On the other hand, the Revenue argued that the pipes manufactured were of higher diameter than the imported ones, indicating diversion. The Revenue contended that the appellants had no valid explanation for the shortage of imported copper pipes.

After hearing both sides and examining the case records, the Tribunal considered whether the imported pipes were diverted clandestinely or used for remelting to make higher diameter pipes. The Tribunal noted that during stock taking, no significant discrepancies were found, and the Commissioner did not dispute the feasibility of remelting imported copper tubes. The adjudicating authority's findings supported the appellant's claim that imported pipes were remelted. The absence of concrete evidence of clandestine removal or acquisition of extra raw material strengthened the appellant's argument. The Tribunal emphasized that statements alone, without corroborative evidence, cannot solely justify the confirmation of demand for clandestine manufacture. Consequently, the appellants established a prima facie case for a full waiver of the confirmed dues and penalties.

In conclusion, the Tribunal granted a stay on the recoveries of the confirmed dues and penalties until the final disposal of the appeals, considering the arguments and evidences presented by both parties.