2017 (8) TMI 65 - AT - Central Excise

Clandestine removal - it was alleged that in the guise of issuing the excess burning loss, the appellants are clearing the goods clandestinely without payment of duty - Held that - the SCN were issued to alleging clandestine removal of goods only on the basis of audit conducted in their premises alleging that the burning loss claiming by the appellant is more than 2% i.e. 5.3%, 5.58 %, 5.49% respectively, which is less than 6-7% has clarified by the Ld. Chief Commissioner, Chandigarh vide letter dated 13.12.2011 and no other tangible evidence has been produced on record for clandestine removal of goods - reliance placed in the case of CCE & ST, Ludhiana Versus M/s. Om Steel Rolling Mills and others 2015 (10) TMI 1321 - CESTAT DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues: Allegation of clandestine removal of goods based on burning loss percentage exceeding 2%

Analysis:
The appellants appealed against an order confirming demands, alleging their involvement in clandestine removal of goods due to claiming burning loss exceeding 2%. The cases had identical facts and issues, leading to a common order. During an audit at the premises of two companies, it was found that they claimed burning loss ranging from 5.3% to 5.49% for final products, triggering show cause notices for alleged duty evasion. The appellants argued that a letter from the Chief Commissioner clarified burning loss variations and emphasized the need for tangible evidence of clandestine activities. They cited previous tribunal decisions to support their case.

The tribunal examined the Chief Commissioner's instructions regarding burning loss percentages in hot re-rolling mills, emphasizing the necessity of tangible evidence for duty demands based solely on high burning loss percentages. The show cause notices in this case were issued primarily on the basis of audit findings regarding burning loss percentages exceeding 2%. However, as per the Chief Commissioner's clarification and absence of other tangible evidence, the tribunal held the demands unsustainable. Relying on previous tribunal decisions, the tribunal set aside the impugned orders, allowing the appeals with any consequential relief.

In conclusion, the tribunal ruled in favor of the appellants, highlighting the importance of tangible evidence in duty-related allegations, especially concerning burning loss percentages. The decision was based on legal principles, previous tribunal rulings, and the Chief Commissioner's instructions, ensuring a fair and just outcome in the matter of alleged clandestine removal of goods.