2017 (7) TMI 794 - AT - Central Excise

Clandestine manufacture and removal - there was receipt of about 55 MTs of MS Ingots which were not accounted in their records - Held that - there is nothing which indicates that the Respondent had engaged himself into manufacturing clandestinely on the goods received from his suppliers and cleared the said finished goods clandestinely. On a specific query from the Bench it was pointed out that none of allegations in the show-cause notice considered the issue as to how a final product can be manufactured clandestinely without the receipt of raw-material. In my view the entire demand which has been worked out in the show-cause notice under allegation that there was clandestine removal is based upon presumptions and assumptions which cannot stand scrutiny of the law - appeal dismissed - decided against Revenue.

Summary

Issues:
Alleged evasion of central excise duty based on clandestine procurement of raw material, manufacture, and clearance of finished goods.

Analysis:
The appeal was filed by the Revenue against the order-in-appeal regarding evasion of central excise duty by a manufacturer of re-rolled products of iron and steel. The investigation revealed clandestine procurement of raw material and clearance of finished goods. Show-cause notices were issued to the manufacturer and the current respondent. The adjudicating authority dropped the proceedings against the respondent, which the Revenue appealed. The Revenue contended that the respondent received goods without payment of duty, leading to clandestine clearance. However, the lower authorities found no evidence of clandestine manufacturing or clearance by the respondent.

The main contention was based on the statement of the supplier's Managing Director, indicating clandestine clearance of finished goods and receipt of raw materials by the respondent without payment of duty. The respondent's Director admitted to receiving goods without duty paying documents but claimed to have refunded the amount. The lower authorities' findings did not support the Revenue's claims of clandestine activities by the respondent.

The appellate tribunal found the Revenue's appeal lacked merit as there was no evidence that the respondent engaged in clandestine manufacturing or clearance. The tribunal highlighted the absence of proof linking the respondent to clandestine activities based on presumptions and assumptions. The tribunal upheld the lower authorities' findings, emphasizing the lack of evidence to establish clandestine removal of finished products by the respondent. The tribunal cited case laws supporting the requirement for tangible evidence in cases of clandestine removals, affirming the dismissal of the Revenue's appeal.

In conclusion, the tribunal upheld the impugned order, stating it was correct and legal, without any infirmity. The Revenue's appeal was dismissed, and the order was pronounced in open court on the specified date.