2018 (4) TMI 56 - AT - Central Excise

Clandestine manufacture and removal - CENVAT credit - charge is based on some loose slips - shortage of materials - Held that - the Investigating Officer had made out the case of such clandestine removal on the basis of the loose slips without basis of any enquiry to the extent of clearance of the goods buyer name through investigation. Hence the charge of clandestine removal merely on the basis of the loose slips cannot be sustained - the charge was made on the basis of loose slips which were disowned by the appellant. Shortage of material - Held that - The Stock Verification was done by method of Dip Stock Taking for the measurement of the dips of the material in the storage tank - It appears from the record that the stock of two tanks was not considered during the stock verification. The appellant raised this issue before the lower authorities and it was not refuted by any material. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged clandestine removal of finished goods without payment of duty at Jugberia Unit.
2. Alleged dispatch of finished goods without payment of duty at Sarsuna Unit.
3. Imposition of penalties on the company and director.
4. Reliability of rough exercise books and stock verification process.
5. Discrepancies in weighment entries and Central Excise Invoices.
6. Lack of proper enquiry and evidence for duty demand.
7. Applicability of case laws and legal precedents.
8. Disputed shortage of materials and stock verification process.

Issue 1: Alleged clandestine removal at Jugberia Unit
The case involved allegations of clandestine removal of finished goods without duty payment at Jugberia Unit. The appellant disputed the charges based on loose slips lacking specific goods descriptions. The value difference between Acid Slurry and Spent Sulphuric Acid was highlighted. The tribunal found the charge unsustainable due to lack of proper enquiry and reliance on disowned documents, setting aside the penalties imposed.

Issue 2: Alleged dispatch without payment at Sarsuna Unit
Concerns were raised regarding dispatch entries without Central Excise Invoices and duty payment at Sarsuna Unit. The appellant argued against the reliability of rough exercise books, citing errors and inconsistencies. Discrepancies in weighment entries and invoices were pointed out. The tribunal noted mistakes in entries and lack of evidence supporting duty demands, leading to the appeals being allowed.

Issue 3: Imposition of penalties
Penalties were imposed on the company and director based on the alleged violations. The tribunal reviewed the evidence and arguments presented, ultimately setting aside the penalties due to insufficient proof and procedural errors in the enforcement actions.

Issue 4: Reliability of exercise books and stock verification
Challenges were raised regarding the reliability of rough exercise books and the stock verification process. The appellant highlighted errors and inconsistencies in the entries, questioning the validity of the demands based on such records. The tribunal considered these arguments and found the demands unsustainable due to lack of credible evidence.

Issue 5: Discrepancies in weighment entries and Central Excise Invoices
Discrepancies between weighment entries and Central Excise Invoices were noted, raising doubts about the accuracy and authenticity of the records. The tribunal reviewed the submissions and found discrepancies that cast doubt on the validity of duty demands, leading to the appeals being allowed.

Issue 6: Lack of proper enquiry and evidence
Concerns were raised regarding the lack of proper enquiry and evidence supporting the duty demands. The tribunal examined the investigative process and found deficiencies in establishing the charges, ultimately setting aside the impugned orders due to insufficient evidence.

Issue 7: Applicability of case laws
The appellant cited various tribunal and high court decisions in support of their arguments. The tribunal considered these references but ultimately based its decision on the specific facts and evidence presented in the case, finding the charges unsustainable and allowing the appeals.

Issue 8: Disputed shortage of materials and stock verification process
Disputes arose regarding the alleged shortage of materials and the stock verification process. The appellant raised concerns about the methodology used in stock verification and highlighted discrepancies in the process. The tribunal reviewed the arguments and evidence, concluding that the demands based on disputed shortages were not sustainable, leading to the appeals being allowed.