2016 (10) TMI 868 - AT - Central Excise

Clandestine removal of goods - clubbing of clearances for SSI exemption - moulds for footwear - Held that - the turnovers for the year 2004-05 and 2005-06, as recorded by the Original Authority, were mainly based on the assumptions and presumptions and theoretical calculation of average production/value of clearances. Accordingly, without giving weightage to the presumptive calculation, the aggregate value of clearances of these two respondents were found to be below SSI limit of ₹ 1 crore even taken together. Regarding recovery of cash, we note that there is nothing on record to link the said amount as sale proceeds of clandestinely removed excisable goods. Due explanation has been filed by the respondent to account for said cash claimed to be the sale proceeds of the agricultural land. In the absence of any evidence and also in view of the findings against the Revenue regarding clandestine manufacture and clearance, we hold that the seizure and confiscation of the cash and also of the finished goods are not sustainable - appeal dismissed - decided against Revenue.

Summary

Issues: Revenue's appeal against Commissioner (Appeals-I) order regarding central excise duty demand, penalties, and confiscation of goods and cash.

Analysis:
1. Combining Turnover for Duty Determination:
- Central excise officers initiated proceedings against both respondents for duty demand and penalties based on alleged manufacturing and clearance of moulds without proper duty payment.
- Original Authority combined both respondents' turnover to determine duty liability under Notification No.8/2003-CE.
- Commissioner (Appeals) set aside the original order, leading to Revenue's appeals.

2. Clandestine Removal Allegations:
- Allegations against respondents for clandestine removal of goods and combining turnover for SSI exemption limit.
- Confiscation of cash and goods due to violations.
- Evidence from private records and challan books formed the basis of allegations.
- First Appellate Authority found lack of evidence supporting job work charges payment and theoretical basis for duty calculation.

3. Evidentiary Issues and Lack of Corroboration:
- Original Authority's uncertainty regarding quantity, description, and nature of alleged manufactured goods.
- Lack of corroboration for duty liability calculation and authenticity of recovered documents.
- Department's failure to ascertain crucial details of manufactured goods and reliance on uniform rates without verification.

4. First Appellate Authority's Findings:
- First Appellate Authority discredited presumptive calculations and theoretical values, finding turnover below SSI limit.
- Lack of evidence linking seized cash to clandestine goods sale.
- Respondent's explanation for cash source accepted due to lack of evidence against clandestine activities.

5. Judgment and Dismissal of Appeals:
- Tribunal dismissed Revenue's appeals after thorough examination of impugned order and grounds.
- Upheld first Appellate Authority's findings regarding lack of justification for altering the order.
- Seizure and confiscation of cash and goods deemed unsustainable due to lack of evidence against respondents.

This detailed analysis outlines the key issues addressed in the judgment, including duty determination, clandestine removal allegations, evidentiary shortcomings, first Appellate Authority's findings, and the final decision to dismiss Revenue's appeals.