2009 (8) TMI 25 - HC - Central Excise

Clandestine Clearance CTD bars held that - Tribunal has properly distinguished the decision of the Supreme Court in Triveni Rubber - the furnace was severely damaged and on account of the consequent heat loss consumption of the furnace oil alone was not sufficient to estimate the production of C.T.D. Bars - The burden of proving clandestine removal as alleged in the addendum show cause notice was on the revenue which has not been discharged - The Tribunal, as the last fact finding authority, has held that the clandestine removal alleged in the addendum show cause notice was not proved. The view taken by the Tribunal is clearly a possible view of facts and there is nothing on record to show that the Tribunal has ignored or failed to take into consideration any relevant fact or that the view of the Tribunal is in any way perverse. revenue appeal dismissed.

Summary

Issues:
1. Appeal against the judgment and order dated 9th May 2008 passed by the Customs, Excise and Service Tax Tribunal.
2. Allegations of clandestine clearance of CTD bars by the respondents.
3. Settlement Commission's rejection of the application for settlement.
4. Confirmation of excise duty and penalty by the Commissioner of Central Excise.
5. Appeal before the Tribunal and subsequent order dated 9th May 2008.
6. Dispute regarding the clandestine removal of goods as alleged in the addendum/corrigendum notice.
7. Consideration of factors in estimating production for excise duty purposes.
8. Interpretation of Rule 173E of the Central Excise Rules.
9. Assessment of evidence and findings by the Tribunal.

Analysis:
1. The appeal was filed against the judgment and order dated 9th May 2008 by the Customs, Excise and Service Tax Tribunal. The case involved allegations of clandestine clearance of CTD bars by the respondents. The first respondent, a Private Limited Company, and its directors were accused of evading excise duty. A show cause notice was issued, followed by an addendum/corrigendum notice for a larger quantity of alleged clandestine clearance. The Settlement Commission rejected the application for settlement, leading to the confirmation of excise duty and penalty by the Commissioner of Central Excise.

2. The Tribunal's order dated 9th May 2008 confirmed the duty and demand for the initial alleged clandestine removal but set aside the balance demand from the addendum/corrigendum notice. The key issue revolved around whether the appellant had proven the clandestine removal of additional goods as alleged in the subsequent notice. The Tribunal found that the appellant had not discharged the burden of proof regarding the larger quantity of alleged clandestine removal.

3. The estimation of production for excise duty purposes was a crucial aspect of the case. The Commissioner relied on the consumption of furnace oil to estimate the production of CTD bars. However, the Tribunal disagreed with the Commissioner's conclusion, noting discrepancies in the calculation of production based solely on furnace oil consumption. The Tribunal emphasized the need to consider various factors, including raw material utilization and other relevant aspects, in estimating production accurately.

4. Rule 173E of the Central Excise Rules was invoked to determine normal production. The rule allows officers to fix the quantum of production based on factors like installed capacity, raw material utilization, and labor employed. The Tribunal highlighted the importance of considering all relevant factors and not solely relying on energy consumption, as emphasized in a Supreme Court decision cited during the proceedings.

5. The Tribunal's decision was based on a thorough evaluation of the evidence and arguments presented. It considered the explanations provided by the appellant regarding the higher consumption of furnace oil and the repairs carried out on the furnace. The Tribunal found that the burden of proving the alleged clandestine removal as per the addendum/corrigendum notice was not met by the appellant. Consequently, the Tribunal's findings were upheld as a reasonable interpretation of the facts presented.

6. Ultimately, the appeal was dismissed summarily due to the lack of merit in challenging the Tribunal's decision. The Tribunal's assessment of the evidence and its conclusion regarding the alleged clandestine removal were deemed valid and supported by the facts presented during the proceedings.