2017 (7) TMI 892 - AT - Central Excise

Clandestine removal - job-work - penalty - The Revenue s case is that after job work, the goods have been received back in the factory of the appellant and further process has been carried out thereon - The case of the appellant is that after carrying out the further process, these finished goods were entered in RG-I register - Held that - The Revenue has not proved that the goods received from the job worker and after further process were not entered in RG-I register. If the Revenue would have proved that all the goods received from the job worker back and after process the same has been cleared without payment of duty. In that case, there shall be a case of open and shut but in this case only duty involved of ₹ 42243/- has been established that the appellant had cleared the said goods on the basis of challans of the job worker and after processing without any invoices, the demand of ₹ 42,243/- alongwith interest is confirmed and penalty equal to that is also imposed - demand of ₹ 42,243/- is confirmed along with interest and equivalent amount of penalty is also imposed. For the remaining demand, it shows that the investigation has done half heartedly without bringing concrete evidence of clandestine removal of goods. Therefore, the demand is not sustainable. With regard to the statement recorded from M/s Chawla Auto Agency, although M/s Chawla Auto Agency has admitted that they have received the goods without cover of invoice but the appellant has never admitted that fact, moreover, while issuing show cause notice M/s Chawla Auto Agency was not made party to the proceedings to impose penalty under Rule 26 of the Central Excise Rules, 2002, which shows that the evidence collected from M/s Chawla Auto Agency are not fair evidence to allege clandestine removal of the goods by the appellant to M/s Chawala Auto Agency without cover of invoices, therefore, the said demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Allegation of clandestine removal of goods
- Duty demand and penalties imposed
- Evidence and statements from job workers and buyers
- Admissibility of goods sent for processing
- Maintaining records and invoices
- Inconsistencies in Revenue's case
- Imposition of penalties

Allegation of Clandestine Removal of Goods:
The case involves an appeal against the confirmation of duty demand and penalties on the appellants for alleged clandestine removal of goods. The main appellant, engaged in manufacturing rubber auto parts, sent raw materials to job workers for processing without maintaining proper records. The Revenue alleged that goods were cleared clandestinely, supported by statements from buyers and discrepancies in goods received. The issue at hand is whether the appellants were indeed involved in clandestine activities.

Duty Demand and Penalties Imposed:
The Revenue demanded duty on goods sent for processing and received back, which were allegedly cleared clandestinely. The appellants contested this, arguing that goods sent for processing were not finished goods and could not be sold without further processing. The duty demand of ?42,243 was acknowledged by the appellants to avoid litigation. The Tribunal confirmed this demand along with interest and imposed an equivalent penalty.

Evidence and Statements from Job Workers and Buyers:
Statements from job workers and buyers played a crucial role in the case. While the Revenue relied on these statements to support the allegation of clandestine removal, the appellants contested the accuracy of the statements. Discrepancies between the statements provided by the appellants and the buyers raised questions about the credibility of the evidence presented.

Admissibility of Goods Sent for Processing:
The appellants maintained that goods sent for processing were not finished goods and required further processing before being sold. They argued that the Revenue failed to prove that the goods received back from job workers were cleared without proper invoicing. The Tribunal found discrepancies in the Revenue's case regarding the status of goods sent for processing and the subsequent clearance.

Maintaining Records and Invoices:
The case highlighted the importance of maintaining records and invoices for goods sent for processing and subsequent clearance. The appellants' failure to maintain proper records raised suspicions of clandestine activities. However, the Tribunal noted that the Revenue did not provide concrete evidence of goods being cleared without invoices, casting doubt on the allegations.

Inconsistencies in Revenue's Case:
The Tribunal observed inconsistencies in the Revenue's case, particularly regarding the receipt of goods back from job workers and the subsequent clearance process. The lack of concrete evidence linking the alleged clandestine activities to the appellants raised doubts about the validity of the duty demand and penalties imposed.

Imposition of Penalties:
The Tribunal ultimately confirmed the duty demand of ?42,243 along with interest and imposed penalties on the appellants. However, the Tribunal noted that certain aspects of the Revenue's case lacked substantial evidence, leading to the dismissal of some demands. The imposition of penalties was based on the admitted liability by the appellants and the lack of concrete evidence supporting the allegations.

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