2015 (1) TMI 267 - AT - Central Excise

Clandestine removal of goods - Penalty u/s 11AC - Maintenance of production records - Held that - entire case of the Revenue is based upon some production records maintained by the respondents. The respondents have explained the purpose for maintenance of such records as also the fact that they cannot be taken as the final production inasmuch as the percentage yield differs on day-to-day basis and the plant production can never be achieved. Apart from the said production records, which are being contested by the respondents, there is virtually no other evidences on record indicating any excess manufacture of final product or the clandestine removal of the same. The appellate authority has rightly observed that the factum of non-variation of the stock on the date of visit of the offers carry a lot of weightage to support the respondents stand that they were not indulging in any clandestine activity. - In the absence of any other evidence to reflect upon the clandestine activity of the respondents, I fully agree with the findings of the commissioner (Appeals) that the demands cannot be confirmed against the respondents - Decided against Revenue.

Summary

Issues Involved:
Alleged clandestine removal of sponge iron without duty payment.

Analysis:
The case involved an appeal by the Revenue against the order passed by the Commissioner (Appeals) regarding the alleged clandestine removal of sponge iron by the respondents without payment of duty. The Central Excise officers visited the factory of the respondents and suspected clandestine clearance based on plant operation reports. A Show Cause Notice was issued, alleging the removal of 1,283 M.T. of sponge iron without duty payment. The original adjudicating authority confirmed the demands and imposed penalties under the Central Excise Act, 1944. However, the Commissioner (Appeals) set aside this order, leading to the Revenue's present appeal.

The appellate authority considered various factors, including the lack of stock variation of sponge iron during the officers' visit, indicating no clandestine activities. Statements by company officials highlighted the challenges in production, such as variations in yield and losses due to technical issues. The authority noted that the Revenue's case relied on presumptions and insufficient evidence. The production records contested by the respondents were the primary basis for the Revenue's allegations. The lack of concrete evidence besides these records supported the respondents' position that no clandestine activities occurred.

Ultimately, the appellate authority agreed with the Commissioner (Appeals) that without additional evidence confirming clandestine activities, the demands against the respondents could not be upheld. The absence of proof beyond contested production records and the non-variation of stock during the officers' visit led to the rejection of the Revenue's appeal. The judgment was pronounced on 21-2-2014.