2017 (5) TMI 664 - AT - Central Excise

Clandestine removal - SSI exemption - manufacture of button bits and hammers and parts of hammer assemblies - Held that - the alleged discrepancies consumption of the raw material and sale of the suppressed production has not been proved and department has not produced any corroborative evidence to counter this finding - It appears that all the 3 units are the legal entities registered with statutory authorities including Central Excise. They are located in different places and having the separate machineries. They are also doing the job works for their parties. Their accounts are independent they are for the purpose of direct and indirect taxes. When it is so the SSI exemption cannot be denied to the respondent company - appeal filed by department dismissed on account of absence of any corroborative evidence - decided against Revenue.

Summary

Issues: Alleged clandestine removal of goods, SSI exemption eligibility, evasion of central excise duty liability.

In this case, the appellant-department filed an appeal against the Order-in-Original related to the alleged clandestine removal of finished goods by the respondent during a specific period, leading to the ineligibility of SSI exemption and alleged evasion of central excise duty. The Tribunal had previously remanded the matter for cross-examination. The main issue revolved around the SSI exemption under Notification No.16/97 CE and the alleged discrepancies in the clubbing of clearances and clandestine manufacture and removals. The department contended that the demand was dropped without examining the entire issue thoroughly. On the other hand, the respondent justified the impugned order by stating that work was provided to other units based on job work, and there was no suppressed production.

During the proceedings, it was highlighted that the key person overseeing the manufacturing operations of all units was the Managing Partner of the respondent, supported by other staff members. The Commissioner, after analysis, concluded that no corroborative evidence was available to prove the alleged discrepancies. The Tribunal found that the department failed to provide substantial evidence to counter the findings, and the profit accounts recovered only covered finished goods cleared by the respondent. The separate legal entities of the three units, their independent accounts, and compliance with statutory requirements supported the view that SSI exemption should not be denied to the respondent company.

The Commissioner's detailed analysis of all issues, as directed by the Tribunal, led to reasoned conclusions that there was no concrete evidence of clandestine production or clearance, excess consumption of resources, or unaccounted transactions. The Commissioner also disagreed with the previous view that production was solely attributed to one unit, emphasizing the compliance of all units with exemption limits and legal requirements. Ultimately, the Tribunal upheld the original authority's decision, stating that the department failed to provide substantial evidence to support their allegations, leading to the dismissal of the department's appeal.