2018 (3) TMI 243 - AT - Central Excise

Clandestine removal - SSI exemption - clubbing of clearances - crossing of threshold limit - Held that - there is virtually no evidence on record to show that the manufacturing unit was indulging in clandestine activities. In the absence of any positive and affirmative evidence to confirm the above charge, the finding of Commissioner (Appeals) cannot be upheld - demand alongwith penalties set aside. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Interpretation of Notification No.8/2003 dated 01.03.2003
- Duty liability exceeding exemption limit of ?1 crore
- Reduction of duty and penalties by Commissioner (Appeals)
- Upholding of duty on clandestine activities
- Evidence of manufacturing unit's involvement in clandestine activities
- Setting aside of demands and penalties
- Appeal by Revenue against dropped demand

Interpretation of Notification No.8/2003 dated 01.03.2003:
The judgment involves a case where the manufacturing unit, engaged in the production of thinner, and two trading units were under investigation for allegedly clearing products to traders based on kachcha slips. The Revenue initiated proceedings against the appellants for duty amounting to ?2,33,81,204, denying them the benefit of the SSI notification due to clearances exceeding the exemption limit of ?1 crore.

Reduction of duty and penalties by Commissioner (Appeals):
On appeal, the Commissioner (Appeals) reduced the duty to ?3,70,795 and penalties on the manufacturing unit, while penalties on the trading units were reduced to ?1 lakh. The reduction was based on the findings that only six specific brands were manufactured by the appellant, and charges of clandestine removals were not proven beyond doubt.

Upholding of duty on clandestine activities:
The appellate authority upheld part of the duty on clandestine activities based on the statement of the authorized representative of the appellant. However, the judgment noted a lack of concrete evidence to support the claim of clandestine activities by the manufacturing unit, leading to the setting aside of the demand and penalties imposed by the Commissioner (Appeals).

Setting aside of demands and penalties:
As the demands were set aside due to insufficient evidence, the penalties imposed on all appellants were also set aside, and their appeals were allowed with consequential relief.

Appeal by Revenue against dropped demand:
The Revenue's appeals, which challenged the dropped demand, were rendered infructuous following the setting aside of the confirmed demand. Consequently, the Revenue's appeals were rejected.

In conclusion, the judgment addressed various issues related to duty liabilities, interpretation of notifications, evidence of clandestine activities, and penalties imposed on the appellants. The decision emphasized the importance of concrete evidence to support allegations and led to the setting aside of demands and penalties due to lack of substantiated proof.