2018 (4) TMI 289 - AT - Central Excise

Clandestine removal - the entire case of the Revenue is based upon the shortages conducted at the time of visit of the officers - Held that - Apart from the shortages, there is virtually no other evidence on record to reflect upon the clandestine activities of the appellant - As per the settled law such shortages, by themselves, cannot lead to the fact of clandestine removals so as to justify confirmation of demands - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Shortages found during stock taking leading to duty evasion allegations
- Rejection of refund application by lower authorities
- Confirmation of demands and imposition of penalties on the manufacturing unit and an employee

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Hon’ble Ms. Archana Wadhwa, Member (Judicial), pertains to three appeals arising from the same set of facts. The appellant, engaged in manufacturing decorative plywood and decorative aluminum sheets, faced allegations of duty evasion due to shortages of around 24,000 pieces found during a visit by the Anti Evasion team. The General Manager (Commercial) submitted that the stock of the exports section should be considered and denied clandestine clearances. Despite debiting the duty amount from their Cenvat credit account, the appellant's refund application was rejected, leading to demands and penalties being imposed on the manufacturing unit and an employee.

During the proceedings, it was noted that the Revenue's case relied solely on the shortages observed during the officers' visit. The appellants did not admit to any clandestine removal of the shortages and highlighted the stock in the export section. The judgment referenced legal precedents, including decisions from the Hon’ble Allahabad High Court and the Hon’ble Punjab & Haryana High Court, emphasizing that shortages alone cannot establish clandestine removals without additional evidence. The Tribunal, in line with previous rulings, held that charges based solely on shortages without further proof of illegal activities cannot be upheld. Consequently, the impugned orders confirming the demands and rejecting the refund claim were set aside, and all three appeals were allowed with relief for the appellants.