2018 (8) TMI 235 - AT - Central Excise

Clandestine manufacture and removal - it is alleged that induction furnace units engaged in the manufacture of MS ingots as that of M/s.Ispat India, Noticee No.1 are showing consumption of electricity in excess to ideal limit and are also engaged in suppression of production and clandestine removal - Held that - The initial demand of ₹ 9.57 Crore, the major part thereof i.e. ₹ 9.43 Crores has already been dropped - to that extent, the order under challenge is upheld. Remaining penalty of ₹ 50,000/- - Held that - Appellant herein is merely a consignment agent that too for providing the raw material to the manufacturer i.e. M/s. Ispat India Ltd. The allegations of any clandestine removal of final products by M/s. Ispat India 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:
Alleged suppression of production and clandestine removal of iron and steel products, excess consumption of electricity, confirmation of penalty.

Analysis:
The judgment pertains to an appeal filed by a broker/commission agent dealing with iron and steel products against a show cause notice alleging suppression of production and clandestine removal of MS Ingots and excess consumption of electricity. The appellant acted as a consignment agent for M/s. Ispat India, providing raw material like sponge iron. The demand raised was partially dropped, with a penalty of ?50,000 being confirmed. The appellant argued lack of corroborative evidence supporting the allegations. The Department contended that the main noticee's case was pending, and the benefit claimed by the appellant was premature. The Tribunal noted that a significant portion of the demand had been dropped, citing a precedent. Regarding the remaining penalty, the Tribunal found no evidence linking the appellant to clandestine activities by M/s. Ispat India. Relying on previous decisions, the Tribunal set aside the penalty, emphasizing the absence of cogent evidence supporting the allegations. The judgment highlights the importance of corroborative evidence in establishing liability and upholding penalties in excise matters.

In conclusion, the Tribunal upheld the dropping of the major demand but set aside the penalty imposed on the appellant. The decision was based on the lack of evidence linking the appellant to clandestine activities and the importance of corroborative evidence in excise cases. The judgment serves as a reminder of the necessity for concrete proof to support allegations of wrongdoing in excise matters, ensuring fair adjudication and penalty imposition.