2018 (2) TMI 1665 - AT - Central Excise

Clandestine removal - Ceramics Tiles - whether the appellant had clandestinely manufactured and cleared 44614 boxes of ceramic tiles involving a total duty of ₹ 4,54,929/-? - Held that - Undisputedly, the allegation of removal of 44614 boxes of ceramic tiles during the period from 05.04.2011 to 16.11.2011, arrived at on the basis of information furnished by the director on the production capacity of the Tiles per day as 6500 boxes. The total quantity of ceramic tiles @ 6500 boxes per day was multiplied to the number of days, to arrive at the total production, during the said period from 05.04.2011 to 16.11.2011. The quantity mentioned in the RG-I Register was compared so as to arrive at the clearance of 44614 boxes being the difference between the recorded figure in RG-I register and the optimum production of 6500 boxes per day - The other evidence that was relied upon in the notice is the statement of Shri Javed Suleman Chania, who alleged to have purchased the ceramic tiles from the appellant manufactured and cleared without payment of duty. The said statement could not stand to the scrutiny of cross examination. In absence of other corroborative evidences solely on the basis of the director s statement of production capacity, the allegation of clandestine removal based on theoretical calculation cannot be sustained as held in a series of cases. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining clandestine manufacture and clearance of ceramic tiles involving duty payment.

Analysis:
The appeals were filed against the order-in-appeal dated 09.07.2014 passed by the Commissioner (Appeals-I) of Central Excise- Ahmedabad. The appellants, engaged in manufacturing ceramic tiles, were alleged to have clandestinely manufactured and cleared 44,614 boxes of tiles, leading to a duty demand of &8377; 4,54,929. The basis for this allegation was the discrepancy between the recorded production in the RG-I Register and the theoretical calculation derived from the director's statement on the plant's production capacity. The director had mentioned a daily production capacity of 6500 boxes, which was used to calculate the alleged clandestine manufacture and clearance during the period in question. Additionally, a statement from a customer, Shri Javed Suleman Chania, was relied upon by the department to support the allegation. However, during cross-examination, Chania denied any dealings with the appellant company, undermining the credibility of his statement. The appellate tribunal noted that apart from the director's statement and Chania's statement, no other corroborative evidence was presented by the department to establish clandestine activities.

The appellant's advocate argued that the demand was solely based on theoretical calculations and lacked concrete evidence of clandestine activities. Despite the director mentioning customers to whom goods were sold, only one customer was investigated, and discrepancies were found in his statement during cross-examination. The advocate contended that solely relying on the director's statement about production capacity was insufficient to confirm clandestine manufacture and clearance of ceramic tiles. The revenue's representative, while supporting the findings of the Commissioner (Appeals), acknowledged the lack of substantial corroborative evidence beyond the statements of the director and Chania.

After considering the arguments and evidence, the tribunal concluded that the allegation of clandestine removal based on theoretical calculations and unverified statements was not sustainable. Citing previous cases, the tribunal emphasized the need for concrete corroborative evidence to establish clandestine activities. As a result, the impugned order was set aside, and the appeals were allowed with consequential relief, if any, as per the law.