2018 (8) TMI 88 - AT - Central Excise

Clandestine removal - it was alleged that Kanpur unit are receiving the raw materials from their factory located at Malwan, Fatehpur i.e. the present appellant - The Tribunal s decision in appellant own case 2008 (1) TMI 782 - CESTAT, NEW DELHI passed in respect of their Kanpur unit vide which the allegation of clandestine removal, which was primarily based upon the receipt of raw material from the present appellant at Fatehpur unit, without payment of duty, where the Tribunal has already set aside the demand against their Kanpur unit. Held that - Grounds of allegations in the present case as also in their Kanpur unit is based upon the same set of records, which were recovered by the visiting officers from the Kanpur unit. Further, while demanding duty from Kanpur unit, on the allegations of clandestine removal, it was revenue s own case that they have received the unaccounted raw material from their unit located at Fatehpur i.e. present appellant - In the present appeal also it is the revenue s case that the appellants have cleared their final products i.e. Ingots & Billets to their unit located at Kanpur, who has further utilized the same for clandestine manufacture and removal - As such it is seen that the allegations as also the evidences in both the cases are interconnected. As the Tribunal has set aside the demand against the Kanpur unit, this fact leads to the inevitable conclusion that the Tribunal has not agreed with the revenue s stand that the Kanpur unit was receiving raw material from Fatehpur unit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of duty demand, interest, and penalty against the manufacturing unit and directors based on alleged clandestine removal of goods from one unit to another.

Analysis:
The judgment pertains to appeals arising from an order confirming a duty demand of ?50,86,570 against a manufacturing unit, along with interest and penalties under Section 11AC of the Central Excise Act. The appellants, engaged in manufacturing M.S. Ingots and Billets, were alleged to have clandestinely supplied goods to another unit for further processing. The revenue's case was built on incriminating documents recovered from the Kanpur unit, indicating unaccounted raw material transfers from the Fatehpur unit. The Tribunal had previously set aside similar allegations against the Kanpur unit, questioning the basis of the charges.

During the proceedings, the appellants argued that since the demand against the Kanpur unit was overturned, the charges against the Fatehpur unit should not stand. The adjudicating authority disagreed, emphasizing the different products manufactured at the Kanpur unit and the presence of incriminating records. However, the Tribunal found the allegations against both units interconnected, as the raw material transfer formed the core of the case. Given the previous decision on the Kanpur unit, the Tribunal concluded that the duty demand against the Fatehpur unit was not sustainable, leading to the dismissal of penalties on the manufacturing unit and its directors.

In summary, the Tribunal allowed all appeals, providing consequential relief to the appellants based on the interconnected nature of the allegations against the manufacturing units and the previous decision regarding the Kanpur unit. The judgment highlights the importance of consistent evidentiary support and interconnectedness of charges in duty demand cases involving multiple units within the same organization.