2018 (8) TMI 167 - AT - Central Excise

Clandestine manufacture and removal - MS ingots - suppression of production - third party evidences - It is alleged that demand upon appellant has been confirmed after scrutinising the documents of M/s. Monu Steel, but without any cogent corroborative evidence in this respect - Held that - From the initial demand of ₹ 13,40,77,925/- the major part thereof i.e. ₹ 11,94,97,832/- has already been dropped, relying upon the decision of Hon ble Apex Court in the case of RA Castings Pvt. Ltd 2011 (1) TMI 1302 - SUPREME COURT OF INDIA - the order under challenge is upheld. Penalty of ₹ 10,000/- - Held that - Appellant herein is merely a consignment agent that too for providing the raw material to the manufacturer i.e. M/s Steel Abrasive Industries Ltd - The allegations of any clandestine removal of final products by M/s Steel Abrasive Industries Ltd. are opined to have no bearing upon the appellant unless and until there is a corroborative cogent evidence to support the allegation of providing the raw-material without discharging the liability - the same is missing on the record - penalty not warranted, Appeal allowed - decided in favor of appellant.

Summary

Issues: Allegations of suppression of production and clandestine removal of iron and steel products, excess consumption of electricity, confirmation of demand, imposition of penalty.

In the present case, the appellant, a broker dealing with iron and steel products, was alleged to be involved in suppression of production and clandestine removal of MS Ingots, along with excess consumption of electricity. The allegations stemmed from the scrutiny of documents recovered during a search operation at the premises of entities involved in the supply chain. A show cause notice was issued to the appellant, leading to the confirmation of the demand by the original adjudicating authority. However, the appellate tribunal dropped the major part of the demand related to electricity consumption but confirmed a penalty of ?10,000. The appellant contended that the demand was based on documents without sufficient corroborative evidence. The tribunal noted that a significant portion of the demand had already been set aside, citing a relevant Supreme Court decision. The tribunal upheld this aspect of the order, finding no infirmity.

Regarding the remaining penalty, the tribunal observed that the appellant acted as a consignment agent providing raw material to the manufacturer and that the allegations of clandestine removal by the manufacturer did not directly implicate the appellant without cogent evidence. Referring to previous decisions, the tribunal highlighted that penalties imposed on similar grounds had been set aside due to lack of corroborative evidence. Applying the same reasoning, the tribunal set aside the penalty imposed on the appellant in the present case, ultimately allowing the appeal.