2017 (3) TMI 1434 - AT - Central Excise

Evasion of duty - clandestine removal - CENVAT credit - Demand - Held that - the demands cannot be confirmed against the appellants without affording the cross examination to the appellant and to give personal hearing with positive evidence, as sought by appellant - matter needs reconsideration. A demand of ₹ 5,92,419/- has sought to be confirmed on the basis of parallel invoices - Held that - the said demand has not been contested by the appellant - demand upheld. Appeal allowed by way of remand.

Summary

Issues:
- Demand of duty, interest, and penalty on the appellants based on evasion of excise duty through suppression of production and clearance of goods.
- Confirmation of demand on various grounds: excess burning loss, shortage of goods, denial of credit, undervaluation of goods, and confirmation of demand on the basis of parallel invoices.

Analysis:
- Excess Burning Loss:
- The appellant argued that the demand was based on assumed excessive burning loss and provided chartered engineer reports to support their claim.
- The appellant requested cross-examination of a company person showing lower burning loss, which was denied.
- The Tribunal found that the demand cannot be confirmed without affording a fair opportunity for cross-examination and presenting evidence. The matter was remanded for re-examination.

- Shortage of Goods:
- The demand was confirmed based on the shortage of M.S. Bars found during stock verification.
- The appellant contended that the physical verification was done hastily without proper weighing and cross-examination of witnesses.
- The Tribunal ruled that cross-examination of witnesses is necessary to ascertain the shortage of goods, and the demand was not sustainable without it. The matter was remanded for further consideration.

- Denial of Credit:
- A demand was raised on the allegation of shortage of MS ingots.
- The appellant argued that the quantity of ingots cannot be weighed accurately in a short time and requested cross-examination of witnesses.
- The Tribunal emphasized the need for cross-examination for justice and remanded the matter for examination by the adjudicating authority.

- Undervaluation of Goods:
- The demand was based on undervaluation by showing goods as old rejects and pitted steel.
- The appellant claimed that due to the closure of the factory, goods deteriorated in quality and were sold at lower prices.
- The Tribunal noted the necessity of cross-examining buyers to prove undervaluation and remanded the matter for further examination.

- Demand on Parallel Invoices:
- A demand was confirmed on the basis of parallel invoices, which the appellant did not contest.
- The statement of the director supported the demand, leading to its confirmation along with penalties.
- The Tribunal confirmed the demand and penalties related to parallel invoices.

- Final Order:
- A demand and penalty were confirmed against one appellant, with a penalty on an individual under Central Excise Rules, 2002.
- The rest of the demands were set aside, and the matter was remanded for re-adjudication after affording cross-examination of witnesses.
- The appeals were disposed of by way of remand, keeping all other issues open for further consideration.