2018 (2) TMI 1402 - AT - Central Excise

Clandestine manufacture and removal - Saraswati writing Pad diary (notebook) was recovered where the details of the finished goods i.e. copper rods manufactured and cleared by them without any bill, were mentioned - Simultaneous search was conducted at the residential premises of Shri Brijesh Kumar from where a cash of ₹ 12,83,000/- was recovered - Held that - this is a case of clandestine removal of the goods without payment of Central Excise duty. During the search, Saraswati writing pad was recovered from the factory premises of M/s. Tirupati Industries, appellant No. 1. Shri Tipesh Kumar, Supervisor, in his statement dated 4.3.2011 accepted that they had been clearing copper rods without raising any bills. He has recorded these details in the Saraswati writing pad. The goods were removed without payment of duty and on the basis of kachaa parchies, as is evident that the same was recovered from the tempo driver DL-IL-5371 from the premises of Shri Mukesh Kumar Gupta s factory. Shri Mukesh Kumar Gupta s factory is totally unregistered factory and entire transaction was made by merely kaccha parchies by making entries in Neelgagan note book. No payment was made or receipt of payment was through banking channel. The transaction was made in cash through unknown buyers of the finished goods. Impugned order sustained - appeal dismissed.

Summary

Issues:
1. Clandestine removal of goods without payment of Central Excise duty.
2. Burden of proof for clandestine manufacture.
3. Duty liability on job work basis.
4. Availing Cenvat Credit on duty paid on wire rod.
5. Applicability of relevant case laws.

Analysis:

Issue 1: Clandestine removal of goods without payment of Central Excise duty
- The case involved a search at a factory engaged in manufacturing copper wire rods where a diary containing details of finished goods cleared without bills was found.
- The appellant was ready to pay duty on the goods but a demand was raised by the department invoking the extended period of limitation with penalties.
- The appeals were filed against the order, with the appellant arguing against the value calculation and selective reliance on statements by the adjudicating authority.
- The tribunal found that there was evidence of clandestine removal of goods without duty payment, leading to the dismissal of the appeals.

Issue 2: Burden of proof for clandestine manufacture
- The burden of proof for clandestine manufacture was on the department, and the appellant failed to provide a plausible defense against the demand raised based on recovered slips.
- The tribunal noted that the goods were supplied to an unregistered factory, and no plausible defense was advanced against the demand raised.

Issue 3: Duty liability on job work basis
- The appellant, a job worker, received raw materials from the main client and argued for re-determination of transaction value treating the gross amount as cum duty price.
- The tribunal considered the duty liability based on job work charges and machinery used for drawing wire out of wire rods, ultimately dismissing the appeal.

Issue 4: Availing Cenvat Credit on duty paid on wire rod
- The appellant claimed entitlement to Cenvat Credit on duty paid on wire rod, asserting that duty liability was limited to job work charges.
- The tribunal analyzed the evidence of procurement and disposal of finished goods, finding no abnormal rise in electricity consumption, and dismissed the appeal.

Issue 5: Applicability of relevant case laws
- The learned counsel cited various case laws to support their arguments regarding duty liability, clandestine removal, and penalty imposition.
- The tribunal considered the arguments presented along with the case laws but upheld the impugned order due to the evidence of clandestine removal and non-payment of duty.

In conclusion, the tribunal dismissed both appeals, affirming the impugned order based on the evidence of clandestine removal of goods without duty payment and upheld the penalties imposed.