2018 (8) TMI 405 - AT - Central Excise

Clandestine removal - shortage of goods - Held that - It is a settled law that mere shortages by themselves do not lead to the inevitable conclusion of clearance of goods in a clandestine manner, unless such allegations are corroborated with admissible and positive evidences - the adjudicating authority is required to examine the said aspect again - matter on remand. CENVAT Credit - inputs - various steel items like Shape, Section, Angle, Rod, Plates, HR Coil, Channel, Joist, etc. used for fabrication of structure, shades and other civil work - Held that - As such for examination of the assessee s claim of use of said item in the fabrication of capital goods as also for examining the applicability of the said decision of Hon ble Gujarat High Court in the case of M/s Mundra Ports & Special Economic Zone Ltd. 2015 (5) TMI 663 - GUJARAT HIGH COURT , it is fit to remand the matter to Original Adjudicating Authority - matter on remand. Appeal allowed by way of remand.

Summary

Issues:
1. Request for adjournment by the Appellant
2. Shortage of final product leading to duty demand and penalty
3. Denial of credit for steel items used in fabrication
4. Remand of the matter to the Original Adjudicating Authority

Analysis:
1. The Appellate Tribunal, CESTAT Allahabad, declined the request for adjournment as the matter had been on record multiple times. The Tribunal proceeded to hear the learned A.R. and reviewed the impugned order.

2. Regarding the shortage of the final product detected during a visit, the Revenue alleged that the goods were cleared clandestinely without duty payment, resulting in a duty demand of around ?49.41 lakhs and imposition of penalty. However, the Tribunal emphasized that mere shortages do not conclusively indicate clandestine clearance unless supported by corroborative evidence. Citing a decision of the Hon'ble Allahabad High Court, the Tribunal directed the adjudicating authority to re-examine the matter in light of established legal principles.

3. Another demand of approximately ?1.50 crores was confirmed by denying credit for steel items used in fabrication based on a Tribunal decision. The appellant asserted that some items were utilized in the fabrication of capital goods, making them eligible for credit even under the Tribunal's decision. Furthermore, the Tribunal noted that the Tribunal's decision was not endorsed by the Hon'ble Gujarat High Court. Therefore, the matter was remanded to the Original Adjudicating Authority for further examination, including the appellant's claims and the applicability of the Gujarat High Court decision.

4. As the case was remanded on the above grounds, the Tribunal left other issues open for the adjudicating authority to reconsider, such as denial of credit for service tax on inward transportation of goods and availing cess. The appellant was assured a fair opportunity to present their case. Consequently, the impugned order was set aside, and the appeal was allowed by way of remand for a comprehensive reevaluation by the adjudicating authority.

This detailed analysis of the judgment by the Appellate Tribunal, CESTAT Allahabad, highlights the key issues addressed, legal principles applied, and the decisions made regarding the appellant's request for adjournment, duty demand and penalty for shortage of goods, denial of credit for steel items, and the remand of the matter to the Original Adjudicating Authority for further examination.