2016 (12) TMI 1462 - AT - Central Excise

Clandestine removal - demand of duty with interest and penalty - denial of SSI exemption - value of clearances including clearances done clandestinely, exceeds the exemption limit - time limitation - Held that - apart from the statement of managing director no other evidence has been brought by the revenue on record to show that the goods have been manufactured how the inputs for these goods have been procured and how these goods have been cleared i.e. mode of transportation. The authors of these loose slips have not been called for clarification of clandestine clearances of the goods. In the absence of such corroborative evidence demand is not sustainable against the main assessee - the charge of clandestine removal of goods against the main assessee is not sustainable. Therefore, the demand of duty along with interest and penalty on both the assessee is not imposable. Extended period of limitation on charge of clandestine removal - Held that - as the charge of clandestine removal has been set aside against the parties, therefore, revenues appeal deserves no merits and the ld. commissioner (A) has rightly allowed the benefit of limitation to the main assessee more over on merits. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Allegation of clandestine removal of goods without payment of duty
- Denial of exemption under notification number 08/2003 for the year 2008-09
- Benefit of limitation granted by the Commissioner (A) to the assessee

Analysis:

1. Allegation of Clandestine Removal of Goods:
The case revolved around loose slips recovered during a search at the main assessee's factory premises, authored by individuals not confronted during the proceedings. The managing director certified that the items in the slips pertained to clearances beyond recorded statutory limits. The Revenue's case was solely based on these slips, without corroborative evidence on manufacturing, procurement of inputs, or mode of transportation. The Tribunal emphasized the need for concrete evidence, citing precedents where charges were deemed unsustainable without such proof. As no additional evidence supported the clandestine removal allegations, the demand of duty, interest, and penalty on both parties was deemed unsustainable and set aside.

2. Denial of Exemption under Notification No. 08/2003:
The Revenue contended that the extended period of limitation applied due to the alleged clandestine removal. However, since the charge was dismissed, the benefit of limitation was rightly granted to the main assessee by the Commissioner (A). The Tribunal concurred that the denial of exemption for the year 2008-09 was not justified, given the lack of sustainable evidence for clandestine activities. Consequently, the Revenue's appeal was dismissed, and the main assessee's appeals were allowed.

3. Benefit of Limitation Granted by the Commissioner (A):
The Commissioner (A) had allowed the benefit of limitation to the assessee, which the Tribunal upheld due to the lack of substantial evidence supporting the Revenue's allegations. The Tribunal found that the main assessee had a valid case on merits, further justifying the Commissioner's decision. As a result, the Revenue's appeal lacked merit, and the Tribunal upheld the decision to grant the benefit of limitation to the main assessee, ultimately dismissing the Revenue's appeal.

In conclusion, the judgment highlighted the importance of concrete evidence in cases of alleged clandestine activities, emphasizing the need for corroborative proof to sustain charges. The Tribunal's decision focused on the lack of substantial evidence supporting the Revenue's claims, leading to the dismissal of demands and penalties imposed on the main assessee. The judgment also underscored the significance of granting benefits of limitation based on the merits of the case, ultimately resulting in the dismissal of the Revenue's appeal and the allowance of the main assessee's appeals.