2018 (7) TMI 1111 - AT - Central Excise

Clandestine removal - reclaimed rubber, 2.75x18 Tubes, Nylon Fabric, Zinc Oxide - appellant case is that they are not manufacturer of said items, the impugned demand cannot sustain - Held that - Admittedly the items which have been cleared are not the items which the appellant manufactured. Thus, the duty demand for the removal of manufactured goods is not tenable - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Duty demand on excisable goods, availing exemption of duty, erroneous declaration in returns, confirmation of demand, imposition of penalty, appeal against order, explanation provided by the appellant, absence of willful suppression of facts, demand for removal of manufactured goods, consequential benefits.

Analysis:
1. Duty Demand on Excisable Goods:
The case involved a duty demand of ?3,36,936 on goods cleared by the appellant valued at ?32,71,225. The appellant had erroneously shown duty payable as nil in their returns without availing the necessary duty exemption notifications. The Deputy Commissioner confirmed the demand, stating that the appellant failed to maintain separate accounts for duty paid and non-duty paid goods, leading to the rejection of their explanation. The Commissioner (Appeals) set aside the demand for Zinc Oxide but confirmed the balance demand of ?3,23,031 with interest. However, the penalties imposed under Rule 25 and Rule 26 were set aside due to the absence of willful suppression of facts against the appellant.

2. Appeal Against Order:
The appellant appealed before the Tribunal, arguing that they had provided a valid explanation and documentary evidence for goods removed as inputs, which were not manufactured by them. The appellant highlighted that they were not manufacturers of certain cleared items and there was no demand for Cenvat credit for the removal of inputs as such. The appellant requested the impugned order to be set aside, seeking consequential benefits.

3. Confirmation of Demand and Imposition of Penalty:
The Tribunal considered the contentions of both parties and noted that the goods cleared were not manufactured by the appellant. As a result, the duty demand for the removal of manufactured goods was deemed untenable. The Tribunal set aside the impugned order, allowing the appeal and entitling the appellant to consequential benefits as per the law.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the duty demand on goods not manufactured by them and granting consequential benefits. The penalties imposed were also revoked due to the absence of willful suppression of facts.