2018 (12) TMI 850 - AT - Central Excise

Clandestine removal - Wire Rods alleged to have been removed by the Appellant clandestinely, were manufactured out of Aluminium Ingots received by it from principal manufacturer for conversion on job work basis under N/N. 214/86-CE dated 25.03.1996. Held that - There is nothing on record to suggest that the Appellant clandestinely sold the value added Aluminium / Alloy Wire Rod manufactured from out of Aluminium Ingots o 99.7% purity to any other outside party. There is no allegation of the presence of any other Conductor manufacturer in the vicinity, to whom the Appellant could possibly sell such a huge quantities of Wire Rods without payment of duty. The SCN does not place on record any evidence of unaccounted procurement of Aluminium Ingots / other inputs by the Appellant and the source from which the Appellant could procure such unaccounted for Ingots/inputs for use in the clandestine manufacture of Wire Rods. There is no reference of any buyer who might have purchased the allegedly clandestinely removed Wire Rods by the Appellant. There is nothing on record to show unaccounted for receipt of sale proceeds by the Appellant from any source and there is nothing on record to corroborate clandestine manufacture of such huge quantity (493.404 MT) of Aluminium Wire Rods by the Appellant. Taking into account the burning loss and generation of dross approximately at 2%, the Appellant had only 1.5 MT of carried over stock of Ingot/ Scrap as on 01.04.2003. It is also a matter of record that the Appellant did not purchase any Ingot / Scrap on its own account between April to July 2003. With only 1.5 MT of carried over stock of its own purchases of Aluminium / Scrap as on 01.04.2003, the Appellant could not have manufactured 493.404 MT of Wire Rods alleged to have been removed without payment of duty, particularly in the absence of any evidence whatsoever of record to even remotely indicate that the Appellant purchased Aluminium Ingot / Scrap from any Source other than those duly reflect4d in its statutory / private records. The finding of the Ld. Commissioner that the allegedly clandestinely removed 493.404 MT of Wire Rods were not the job-worked goods, is manifestly without any substance. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Allegation of clandestine removal of aluminium/alloy wire rods.
2. Entitlement to the benefit of Notification No.214/86-CE dated 25.03.1986 for job-work.
3. Reconciliation of records and evidence of job-work.
4. Examination of seized documents and cross-examination of officials.
5. Comparison with similar cases and findings.

Issue-wise Detailed Analysis:

1. Allegation of Clandestine Removal:
The appellant was accused of clandestine removal of 493.404 MT of aluminium/alloy wire rods without payment of Central Excise duty. The investigation was based on several seized documents, including gate pass books, delivery challan books, and material outward registers. The appellant argued that 95 out of 147 entries of dispatches tallied with other records, while the remaining 52 entries related to job-work, which were exempt from excise duty under Notification No.214/86-CE.

2. Entitlement to Notification No.214/86-CE:
The appellant contended that the job-work activities were not subject to excise duty as per Notification No.214/86-CE. They argued that the job-work involved conversion of aluminium ingots into wire rods, which were then returned to the principal manufacturers. The appellant maintained that the excise law's strict procedures were not applicable to job-work activities.

3. Reconciliation of Records and Evidence of Job-Work:
The appellant provided a reconciliation statement showing that all wire rods allegedly removed clandestinely were manufactured from aluminium ingots received for job-work. They presented various documents, including inward receipts registers, ingot receipt registers, purchase invoices, and job-work challans, to support their claim. The appellant also highlighted that no discrepancy in stock was found during the search.

4. Examination of Seized Documents and Cross-Examination of Officials:
During the personal hearing, the appellant cross-examined officials and presented seized records evidencing inward receipt of inputs. The appellant argued that the seized records were not properly examined and that procedural discrepancies were acknowledged by their employee, Abhiram Das, who stated that proper procedures were followed from August 2003 onwards.

5. Comparison with Similar Cases and Findings:
The Tribunal noted that similar allegations against Gupta Cables Pvt. Ltd. (GCPL) and Tirupati Conductors Pvt. Ltd. (TCPL) were found to be unsubstantiated. In GCPL's case, the demand was dropped due to lack of evidence, and in TCPL's case, the Commissioner found the allegations to be based on assumptions and uncorroborated evidence. The Tribunal observed that the findings in these cases were applicable to the appellant's case, as no evidence of unaccounted procurement or clandestine sale was found.

Conclusion:
The Tribunal found that there was no evidence to suggest that the appellant clandestinely sold aluminium/alloy wire rods. The seized records and reconciliation statements supported the appellant's claim that the wire rods were manufactured from ingots received for job-work. The Tribunal concluded that the findings of clandestine removal were without substance and set aside the impugned order, allowing the appeals filed by the appellants.

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