2017 (12) TMI 696 - AT - Central Excise

Clandestine removal - shortage of raw material and finished goods - Held that - the Revenue s entire case for clandestine findings against the appellants, is based only upon the shortages detected at the time of their visit. The matter has not been further investigated by the Revenue and no evidences of such clandestine manufacture and clearance, stands produced by them on record - The Hon ble Allahabad High Court in the case of Commr. of Central Excise, Kanpur Vs. Minakshi Castings 2011 (8) TMI 896 - ALLAHABAD HIGH COURT has upheld the Tribunal s decision laying down that the shortages detected at the time of visit of the officer cannot by itself lead to the findings of clandestine removal - appeal allowed - decided in favor of appellant.

Summary

Issues:
Clandestine removal of goods based on shortages detected during visit.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD, delivered by Mrs. Archana Wadhwa, Judicial Member, revolves around the issue of clandestine removal of goods based solely on shortages detected during a visit. The appellant, engaged in manufacturing pipes and tubes, faced proceedings initiated by a show-cause notice alleging duty demand due to shortages in raw materials and final products. The appellant contested the findings, arguing that the shortages were not real and lacked substantial evidence of clandestine removal. Despite the appellant's contentions, the original adjudicating authority upheld the demand, which was subsequently confirmed by the Commissioner (Appeals), leading to the present appeal.

During the proceedings, it was highlighted that the Revenue's case for clandestine findings rested solely on the shortages observed during the visit, without further investigation or concrete evidence of clandestine activities. The judgment referenced precedents, including decisions by the Hon'ble Allahabad High Court and the Tribunal in similar cases, emphasizing that shortages alone cannot establish clandestine removal without additional investigations to identify buyers or suppliers. Drawing from these precedents, the Tribunal found no merit in the Revenue's stance and set aside the impugned orders, allowing both appeals in favor of the appellants.

In conclusion, the judgment underscores the importance of thorough investigations and concrete evidence to establish clandestine activities, cautioning against relying solely on shortages detected during visits. The decision serves as a reminder of the legal standards required to prove allegations of clandestine removal, emphasizing the need for comprehensive evidence beyond mere shortages to substantiate such claims.