2017 (12) TMI 1024 - AT - Central Excise

Clandestine removal - Cement - allegations against the appellant are that they have manufactured cement clandestinely and cleared with payment of duty - Held that - The circumstantial evidence in the form of two trucks found standing in front of the factory is not supported in the form of a panchnama. The capacity of the factory to produce cement containing clinker and slag 50 50 is doubtful - we are of the view that the evidences can, at the most, give rise to doubt in the mind of a prudent man that the entire receipt of raw materials and clearance of finished products is not accounted. However, the allegations of clandestine clearance is a very serious charge and is required to be established on the basis of tangible evidence. But this onerous burden has not been discharged by Revenue. The department has failed to bring on record tangible evidence to support the allegation of clandestine clearances. Appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged clandestine clearance of cement using slag without proper documentation and evidence.

Analysis:
1. The case involved an appeal against the Order-in-Original regarding the alleged clandestine clearance of cement by using slag in addition to clinker without proper documentation. The department alleged that the appellants had not recorded the actual quantity of slag consumption and the full quantum of cement manufactured, demanding duty on the excess cement cleared clandestinely.

2. The main arguments presented by the appellant included the absence of a panchnama during the visit of departmental officers, lack of evidence regarding the movement of slag, denial of manufacturing cement using slag due to inadequate machinery, and retraction of statements by involved individuals. The appellant also questioned the feasibility of producing the alleged quantity of cement based on their production capacity and electricity consumption records.

3. The Revenue justified the impugned order based on the recovery of writing pads containing details of raw materials and cement production, which were confirmed by the Quality Controller and partners but later retracted. The presence of trucks loaded with slag in front of the factory was also highlighted as evidence.

4. The Tribunal analyzed the evidence, noting the absence of a panchnama confirming the presence of trucks and the retracted statements of involved individuals. The capacity of the factory to produce cement with the alleged composition was questioned, emphasizing the lack of discussion by the adjudicating authority on this aspect.

5. Referring to a previous judgment, the Tribunal emphasized the necessity of tangible evidence to establish clandestine clearances, including details on excess production, raw material purchases, dispatch particulars, sale proceeds realization, finished product receipts, and power consumption. The department failed to provide sufficient evidence to support the allegations.

6. Consequently, the Tribunal concluded that the department did not discharge the burden of proving clandestine clearances with tangible evidence. As a result, the impugned order was set aside, and the appeals were allowed on 20.12.2017.