2017 (6) TMI 531 - AT - Central Excise

Clandestine removal - appellant have received the inputs, clandestinely manufactured by M/s Nabha Steels Limited and M/s Pushpanjali Steel Alloys Pvt. Limited - Held that - In the case of M/s Nabha Steels Limited and M/s Pushpanjali Steel Alloys Pvt. Limited, this Tribunal has already held that they were not involved in the activity of clandestinely removal of the goods to the appellant. In that circumstances, the appellant has not received the inputs clandestinely. As inputs have not been received by the appellant, therefore, the question of manufacturing does not arise. As there is no final goods manufactured by the appellant, the duty cannot be demanded from the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of duty, interest, and penalty for alleged clandestine removal of manufactured goods.

Analysis:
The case involved an appeal against an order confirming duty demand, interest, and penalty for the alleged clandestine removal of manufactured goods. The investigation revealed certain cash entries in private records of two companies, suggesting that the appellant procured inputs and cleared final products clandestinely without issuing invoices or paying duty. Show cause notices were issued based on these entries, leading to duty demand, interest, and penalties. The appellant challenged these orders, arguing that the allegations were based on assumptions as the tribunal had previously exonerated the companies from similar charges. The appellant's counsel contended that since the inputs were not received clandestinely, no duty could be demanded. The appellant's liability was disputed by the respondent, who claimed that the appellant had indeed received inputs clandestinely and manufactured goods cleared without payment of duty.

The key issue revolved around whether the appellant had received inputs clandestinely from the two companies and subsequently cleared final products without paying duty. The appellant's defense rested on the tribunal's previous exoneration of the companies involved in the alleged clandestine activities. The tribunal had already ruled that the companies were not engaged in such activities, leading to the argument that the appellant did not receive inputs clandestinely. Consequently, the question of manufacturing final goods without paying duty did not arise, and the duty demand was deemed unsustainable.

In conclusion, the tribunal found that the demand of duty confirmed in the impugned order was not sustainable due to the lack of evidence supporting the allegation of clandestine removal of goods by the appellant. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief.