2018 (9) TMI 1344 - AT - Central Excise

Clandestine removal - short found raw material - Non-registration of new premises - entire order of the Commissioner in confirming the demands is on the sole ground that the said two plots E-60 and 61 were not registered with the central excise department and as such raw materials stored therein cannot be taken note of - Held that - Though it may be a technical offence on the part of the appellant not to get the newly acquired plots registered with the Revenue, but it is also a fact that the information regarding new plots was duly given to the Revenue under the cover of their letter dated 22.05.2007. As such the fact that the raw materials were found in excess in the said new premises cannot be ignored. Inasmuch as the raw materials were in excess at the new premises, the shortages detected by the officers at the registered premises were not real, but pseudo shortages - thus, it cannot be concluded that short found raw materials have been used in the manufacture of the final product. The findings of clandestine removal on the basis of shortages detected by the visiting officers cannot be upheld. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Clandestine storage of raw materials at an unauthorized place.
2. Shortage of goods found during stock verification.
3. Duty demand and penalties imposed based on the shortages.
4. Dispute regarding registration of newly acquired plots.
5. Allegation of using short-found raw materials in the manufacture of final product.

Analysis:
1. The case involved the appellant, engaged in manufacturing scented tobacco, facing allegations of clandestine storage of raw materials at an unauthorized place. The Central Excise officers conducted a verification that revealed excess stock of raw materials at a different location not registered with the department, leading to confiscation and penalties.

2. Shortages of goods were found during stock verification at the registered premises, leading to the Revenue suspecting that the short-found raw materials were used in the manufacture of the final product clandestinely. This suspicion resulted in the initiation of proceedings proposing duty demand and penalties.

3. The dispute centered around the registration of newly acquired plots by the appellant. Although the new plots were not registered with the Central Excise department, the appellant had informed the Revenue about the acquisition of these plots. The shortages detected at the registered premises were contested by the appellant, arguing that the excess raw materials found at the new premises indicated pseudo shortages.

4. The Commissioner's order confirming the demands was primarily based on the premise that the raw materials were not found in the registered premises, implying their use in the final product without duty payment. However, the Tribunal noted that the information about the new plots was indeed provided to the Revenue, and the excess raw materials at the new premises could not be disregarded.

5. The Tribunal, after considering the facts and legal precedents, concluded that the findings of clandestine removal based on shortages detected by visiting officers could not be upheld. Citing relevant cases, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision, providing a comprehensive understanding of the legal proceedings and outcome.