2015 (5) TMI 242 - HC - Central Excise

Shortage of goods - Non accounting of goods - Clandestine removal of goods - Evasion of duty - Held that - With respect to clandestine removal and the liability sought to be imposed upon the assessee, the evidence between the two units i.e. the assessee and D.P. Industries was common. The second aspect which this Court notices facially in the impugned order is that what triggered the show cause notice was the inspection which took place on 22.07.1996. That irregularity or underreporting of the material found have stood concluded in the application made by the assessee under the kar vivad samadhan scheme , which was accepted without reservation by the Revenue. Having regard to these circumstances, as to whether the cross examination of one witness was offered and whether the inference drawn by the CESTAT in this particular case was sustainable, cannot in the opinion of this Court constitute a substantial question of law requiring adjudication. - Decided against Revenue.

Summary

Issues:
1. Revenue's appeal against CESTAT's order.
2. Alleged duty evasion and penalty imposition on the assessee.
3. Evidence from Excise Inspector and Anti Evasion Branch.
4. Show cause notice to the assessee and M/s D.P. Industries.
5. CESTAT's reliance on D.P. Industries case.
6. Revenue's argument on CESTAT's decision.
7. Factual findings and evidence appreciation.
8. Conclusion on the appeal's merit.

Analysis:

1. The Revenue challenged the CESTAT's order, contending errors in not upholding duty and penalty on the assessee. The duty evasion issue arose when the Excise Inspector found unaccounted stainless steel ingots during a factory visit, leading to a shortage of goods.

2. Following an inspection and search by the Anti Evasion Branch, including seizure of documents, a show cause notice was issued to both the assessee and M/s D.P. Industries for allegedly converting ingots into flats clandestinely. The Revenue emphasized the statement of Sanjay Jain, an accountant, as crucial evidence.

3. The CESTAT's decision was influenced by a previous case involving D.P. Industries, where similar evidence was deemed insufficient for proving clandestine activities. The Tribunal's reliance on this case was a point of contention for the Revenue, arguing that independent assessment was necessary, especially regarding witness statements.

4. The Court noted that the factual basis for the show cause notice was common between the assessee and D.P. Industries. The irregularity identified during the 1996 inspection was resolved through a settlement scheme, accepted by the Revenue without objections. Thus, the lack of substantial legal questions in the CESTAT's decision led to the dismissal of the Revenue's appeal.

5. In conclusion, the judgment highlighted the importance of factual evidence, the relevance of past cases in legal decisions, and the significance of independent assessment in determining duty evasion. The dismissal of the appeal underscored the Court's view on the sufficiency of evidence and the lack of legal grounds for challenging the CESTAT's decision.