2018 (10) TMI 946 - AT - Central Excise

Clandestine removal - different brands of aerated water, namely, Pepsi, Mirinda - quantity of finished goods entered in RG-I register was much less than the quantity of Crown Corks issued for production - non-accountal of Crown Corks. Held that - Revenue on the basis of formula has deemed that to manufacture one bottle of aerated water, a particular quantity of essence/concentrate is required and number of Crown Corks issued by the appellant for production are more than as per the formula of concentrate production of essence/concentrate, but the essential input i.e. bottles in which the aerated water is to be sold, no effort was made to ascertain the fact how much bottles were sent for production and how much bottles of finished goods were received - no effort was made to ascertain the fact that how much crown corks were wasted during the manufacture of finished goods and how much bottles were issued for production and how much bottles of finished goods were received. It is a fact on record that aerated water cannot be sold without packed in bottle on which the crown corks is affixed, therefore, the investigation conducted by the Revenue is faulty and Revenue has alleged allegation of clandestine removal against the appellant on the basis of assumption and presumption - The whole case is made out against the appellant only on the basis of assumption and presumption, therefore, the demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against confirmed duty demand, interest, and penalty imposition in aerated water manufacturing case.

Analysis:
The appellant, engaged in aerated water manufacturing, appealed against a confirmed duty demand of ?1,75,40,033 along with interest and penalty. Central Excise Officers found discrepancies in production quantities during a visit to the factory premises. Allegations of clandestine removal of goods based on Crown Corks issued for production were made through a show cause notice. The appellant contested the demand stating it was without basis, relying on previous Tribunal decisions. The Revenue supported the impugned order.

Upon hearing both parties, it was noted that the demand was solely based on discrepancies between Crown Corks issued and finished goods recorded in the RG-I register. The Revenue failed to provide evidence regarding the actual production quantities. The Tribunal emphasized the importance of considering all essential inputs, such as bottles, in addition to Crown Corks. The demand was deemed unsustainable due to lack of concrete evidence and reliance on assumptions.

Referring to previous Tribunal decisions, the judgment highlighted the necessity of considering all factors affecting production norms before imposing duty demands. The Tribunal emphasized the insufficiency of evidence to support the allegations of clandestine removal, especially in the absence of a thorough investigation into wasted materials during production. The faulty investigation by the Revenue led to baseless allegations against the appellant, resulting in the appeal being allowed and the impugned order set aside.

In conclusion, the Tribunal found the demand against the appellant unsustainable due to insufficient evidence and faulty investigation methods. The appeal was allowed with consequential relief, emphasizing the importance of thorough investigations and concrete evidence in duty-related cases.