2018 (1) TMI 823 - AT - Central Excise

Clandestine removal - shortage of stock - demand on the basis of Statement of Shri H M Thakore and Shri U H Thakore and delivery challans recovered at the factory and office premises - Held that - It is undisputed that the delivery challans were in fact indicating the name of the purchaser; no efforts were made by the Revenue authorities to record the statements any of purchaser of the finished goods more so when the delivery challans had the name and address of the purchasers - the investigation in this case is done haphazardly as the Officers of the Revenue not recorded any statement of transporters or purchasers whose name according to the revenue was mentioned on the delivery challans recovered from the factory premises and office premises of the main appellant. There is no iota of an evidence produced by the by the Revenue in the allegation in the show cause notice of purchasing of unaccounted raw-material clandestinely manufactured the goods which could have been ascertained by the unexplained consumption of resources and the movement of the goods clandestinely from the factory premise is not established in any form. The Division Bench of the Tribunal in the case Arya Fibre Ltd 2013 (11) TMI 626 - CESTAT AHMEDABAD has held that there has to be corroborative evidence of actual manufacture of the goods and clearance to identify the persons place of appellants made in order to upholdi the allegation of clandestine removal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals against OIA-AHM-EXCUS-003-APP-261-263-16-17 dated 28/02/2017 by the Commissioner of Central Excise, Customs, and Service Tax, Ahmedabad.

Analysis:
1. Facts and Allegations:
- M/s Astron Zinc Industries faced a shortage of final products during a physical stock taking.
- Show cause notice issued for alleged duty liability removal without payment and penalties imposed.
- All three appellants contested the notice on merits and limitation, but lower authorities confirmed demands and penalties.

2. Appellants' Contentions:
- Appellants argued no evidence of clandestine manufacture or clearance, partners' statements retracted.
- Delivery challans only for goods movement, no allegations of unaccounted raw materials.
- Lack of statements from purchasers mentioned in challans, reliance on specific case laws.

3. Revenue's Arguments:
- Statements recorded, retraction misunderstood, and shortage admitted indicating clandestine removal.
- Challans recovered suggested illicit clearance, duty liability admitted voluntarily.
- Cited case laws to support duty demand based on admitted shortages.

4. Judgment and Analysis:
- Revenue's case relied on statements, delivery challans, and voluntary duty admission.
- Main appellant's explanation on stock discrepancies not considered by lower authorities.
- Lack of efforts to record statements of purchasers mentioned in challans raised doubts on investigation quality.
- Demand of duty on clandestine removal lacked evidence of unaccounted raw material purchase or manufacturing.
- Absence of transporter statements or evidence of huge quantity removal weakened Revenue's case.
- Lack of corroborative evidence led to setting aside duty demand, subsequently nullifying interest and penalties.

5. Conclusion:
- Impugned order set aside, appeals allowed on merits, and demand of duty liability on main appellant deemed unsustainable.
- No findings recorded on other submissions, impugned order sustainable liable to be set aside.

This detailed analysis highlights the key arguments, evidence, and reasoning leading to the judgment's conclusion, emphasizing the lack of substantial evidence supporting the duty demand due to the absence of corroborative proof of clandestine removal.