2018 (1) TMI 988 - AT - Central Excise

Clandestine removal - case of the Department is based on four private note books seized from the residence of Shri Sarma on 9.12.2011 - serious discrepancies between statutory records and seized note books - Held that - the impugned order did not deal with all the factual and legal submission made by the appellant before the Adjudicating Authority. Some of the crucial point were not examined that formed the basis formed for arriving at the conclusion of clandestine manufacture and clearance, as mentioned by the appellant - To manufacture the alleged quantity of M.S. Ingots and Sponge Iron, the appellants require huge quantities of raw materials. This aspect has not been considered analytically for a finding. It is relevant to note that if the appellant manufactures un-accounted quantity of both the M.S. Ingots and Sponge Iron and Sponge Iron have been used for further manufacture of M.S. Ingots, duty cannot be confirmed on both. It is important in such situation, to have independent corroboration about the reliability of such private records. If all statements and deposition during the cross examination are admittedly voluntarily made, preference for one statement ignoring other such statement and deposition during the cross examination, can be made when supported with due corroboration. The matter is remanded back to the Original Authority for a fresh decision after considering all the legal and factual issues raised by the appellant - appeal allowed by way of remand.

Summary

Issues:
- Allegations of non-discharge of proper central excise duty and clandestine clearance of excisable goods.
- Validity of impugned order.
- Discrepancies between statutory records and seized private note books.
- Lack of verification with sellers, buyers, and transporters.
- Quantity discrepancy in alleged clandestine manufacture of M.S. Ingots.
- Duty demand on both M.S. Ingots and Sponge Iron.
- Corroboration of details in seized records.
- Joint and several confirmation of duty demand.
- Legal sustainability of duty demand confirmation.
- Compliance with legal and factual submissions.

Analysis:
The case involved allegations of non-discharge of central excise duty and clandestine clearance of excisable goods against the appellants. The impugned order was challenged on grounds of being non-speaking and not addressing crucial legal and factual points raised by the appellant. Discrepancies between statutory records and seized private note books were highlighted, with specific instances provided. The lack of verification with sellers, buyers, and transporters regarding the allegations of clandestine clearance was pointed out, indicating a gap in the investigation process.

The appellant argued against the quantity discrepancy in the alleged clandestine manufacture of M.S. Ingots, emphasizing the impracticality of the quantities mentioned based on the process involved. Additionally, the issue of duty demand on both M.S. Ingots and Sponge Iron was raised, stating that duty cannot be confirmed on both as they are interconnected in the manufacturing process, with duty paid on input materials available as cenvat credit.

Concerns were also raised regarding the corroboration of details in the seized private records and the manner of stock taking during the investigation. The appellant contested the joint and several confirmation of duty demand, asserting that such action was not legally sustainable. Legal references were cited to support the argument against joint and several confirmation of duty demand.

Upon review, the Tribunal found that the impugned order did not address all legal and factual submissions made by the appellant. It was noted that crucial points forming the basis for the conclusion of clandestine manufacture and clearance were not adequately examined. The Tribunal emphasized the importance of independent corroboration for the reliability of private records and highlighted the need for due consideration of all statements and depositions during the cross-examination process.

Ultimately, the Tribunal set aside the impugned order and remanded the matter back to the Original Authority for a fresh decision. The Tribunal directed the Original Authority to consider all legal and factual issues raised by the appellant and provide adequate opportunity for the appellant to present their case before reaching a decision. The appeals were allowed by way of remand, emphasizing the need for a comprehensive reevaluation of the case.