2017 (5) TMI 753 - AT - Central Excise

Clandestine removal - excess production and clearance of 1295.77 MT of finished goods is admitted in the Audited Balance Sheet but have not been reflected in their E.R.-1 Returns - Held that - the Revenue had not disputed the finding of the Commissioner in so far as no charges have been framed in the SCN as to the difference in the value as declared between the Balance Sheet and AR-1 Return of 2002-03 accepting the excess quantity of 1295.77 MT of finished goods - The Tribunal in the case of NSP Electronics Ltd. vs. Commissioner of C.Ex., Bangalore 2009 (11) TMI 797 - CESTAT BANGALORE observed that entries in the Balance Sheet did not constitute adequate evidence for clandestine removal. It should be based on positive evidence - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of duty and penalty imposition on the Director of the Respondent.
2. Disallowance of Cenvat Credit and imposition of penalty by the Commissioner of Central Excise.
3. Discrepancy in production and clearance of finished goods between Audited Balance Sheet and Excise Return.
4. Lack of corroborative evidence for clandestine production and clearance.
5. Applicability of case laws in the present case.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner of Central Excise, Kolkata-IV, regarding the demand of duty and penalty imposition on the Director of the Respondent. The Respondent filed a Cross-Objection requesting dismissal of the Revenue's appeal.
2. The facts of the case involved the Respondent's engagement in the manufacture of Steel Ingots & Bars/Rods. A Show Cause Notice alleged irregular Cenvat Credit availing and excess production of finished goods without duty payment. The Commissioner disallowed the Cenvat Credit, imposed penalties, but dropped the duty demand and penalty on the Director.
3. The Revenue contended that the excess production and clearance of finished goods were admitted in the Audited Balance Sheet but not reflected in the Excise Return. However, no charges were framed regarding the difference in values between the Balance Sheet and Return, leading to a lack of merit in the Revenue's appeal.
4. The Commissioner's observation highlighted the absence of corroborative evidence for clandestine production and clearance beyond the excess quantity of finished goods. Case laws emphasized the necessity of positive evidence for proving clandestine activities, which was lacking in this case.
5. The judgment dismissed the Revenue's appeal, citing the lack of merit and relevance of the case laws relied upon by the Revenue. The Cross-Objection was also disposed of, concluding the matter.

This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT KOLKATA addresses the issues raised and the key points discussed in the case, providing a comprehensive understanding of the decision and its implications.