2017 (8) TMI 102 - AT - Central Excise

Clandestine manufacture and removal - copper wire of 5.38 mm thickness - whether the appellants had manufactured and cleared 1751.240 kgs. of finished goods without payment of duty? - Held that - The Revenue has calculated that from the excess raw material of 3748.240 kgs. after deducting the admitted quantity of 1997.1 kgs. the remaining quantity must have been used in the manufacture of equal quantity of finished goods and cleared without payment of duty. Except the said presumption by the Revenue, no other evidence has been brought on record including the statement of the partner Shri Bharatkumar Kaluram Heda. The partner Shri Heda on the other hand stated that all the raw materials purchased by them had been duly accounted for in the records, no contrary evidence has been placed by the Revenue. The impugned order is modified to this extent of setting aside confirmation of duty of ₹ 1,02,382/- and penalty against the appellant M/s Vinayak Industries, and the appeal is partly allowed to that extent - appeal disposed off.

Summary

Issues:
1. Clearance of finished goods without payment of duty.
2. Dispute regarding duty demand on alleged removed goods.
3. Imposition of penalty on partners and vehicle owner.

Analysis:

Issue 1: Clearance of finished goods without payment of duty
The case involved two appeals against an Order-in-Appeal passed by the Commissioner (Appeals), Central Excise, Ahmedabad III. The Revenue intercepted a vehicle carrying copper wire without duty payment. The goods were cleared from the factory without payment of duty, leading to a show cause notice for duty recovery and penalty imposition. The appellant challenged the duty demand on 1751.240 kgs. of copper wire, arguing that the shortage in raw material stock did not necessarily indicate duty evasion. The Tribunal found the Revenue's presumption baseless, noting the lack of evidence linking the shortage to the alleged clearance of finished goods without duty payment. Consequently, the duty demand and penalty were set aside.

Issue 2: Dispute regarding duty demand on alleged removed goods
The appellant disputed the duty demand on the alleged removal of 1751.240 kgs. of goods without payment. The appellant contended that the raw material shortage found during the Panchnama was approximate, and there was no concrete evidence of the raw material being used for manufacturing and clearing finished goods without duty payment. The Tribunal agreed, highlighting the absence of evidence supporting the Revenue's claim. The statement of the partner emphasized that all raw materials were duly recorded and used in manufacturing finished goods, further weakening the Revenue's case. Consequently, the duty demand of &8377; 1,02,382/- was deemed unsustainable and set aside.

Issue 3: Imposition of penalty on partners and vehicle owner
The Tribunal addressed the imposition of penalties on the partners and the vehicle owner. It noted that there was no evidence linking the vehicle owner to the clearance of goods without duty payment. As a result, the personal penalty on the vehicle owner was set aside. Additionally, the penalty on the partners was also revoked due to the lack of substantial evidence supporting the duty evasion allegations. The Tribunal partially allowed the appeals, setting aside the duty demand and penalties, thereby disposing of the appeals accordingly.

In conclusion, the Tribunal's judgment focused on the lack of concrete evidence linking the shortage in raw material to the alleged clearance of finished goods without duty payment. The decision highlighted the importance of substantial evidence in establishing duty evasion claims and emphasized the need for a clear nexus between the alleged acts and the penalties imposed.