2019 (6) TMI 554 - AT - Central Excise

Clandestine manufacture and removal - removal of cement under the brand names ASANSOL CEMENT and RANA PREMIUM - SSI Exemption - no evidence with regard to consumption of raw materials, the transportation of raw materials procurement, transport of finished goods or the details of the buyers - HELD THAT - No enquiry has been made into the consumption of Electricity which was required for excess production, no enquiry at the buyers end to find out the finished product receipt detail and no investigation was made with the transporters to ascertain the alleged removal of cement. There was also no investigation to observe whether there was inwards transportation of principal raw materials required for the manufacture of cement. No discrepancy was found in the stock of finished goods as well as in the stock of raw materials. Under the Excise Act, the Excise Duty is leviable on manufacture or production of excisable goods, therefore for levying the Excise Duty, it is necessary to establish that the excisable goods were produced/manufactured by the assessee concern and for asking Section 11A, it is necessary to establish that the excisable goods are removed clandestinely without payment of duty which the Revenue in the case has failed to establish. The Excise Duty cannot be levied merely on the basis of assumptions or presumptions. When there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw materials outside the books has been found - the impugned order has failed to establish the clandestine removal of the finished product - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegations of clandestine manufacture and removal of cement under specific brand names
2. Liability of the Director for involvement in evasion of Central excise duty
3. Appropriation of recovered amount against the demand

Analysis:

Issue 1:
The appellant, a small scale cement manufacturer, availed exemptions under various notifications. The appellant argued that no discrepancies were found in stock records and vehemently denied the allegations of clandestine activities. They maintained that the show cause notice was based on assumptions and quantification errors. The Tribunal observed the necessity to establish clandestine removal for levying excise duty, emphasizing the need for tangible evidence. The lack of investigation into key aspects like electricity consumption, raw material purchase, and transportation raised doubts on the allegations. Citing a High Court case, the Tribunal highlighted the importance of corroborative evidence to prove clandestine activities. Ultimately, the Tribunal found the impugned order failed to establish clandestine removal, leading to the allowance of the appeals.

Issue 2:
Regarding the Director's liability, the Tribunal considered the appellant's detailed submission on raw material consumption and production ratios. The appellant provided a comprehensive table showing the consumption of raw materials aligning with cement production. The lack of evidence regarding excess production details, raw material purchases, and transportation raised doubts on the allegations against the Director. The Tribunal emphasized the need for concrete evidence to establish liability. In the absence of such evidence, the impugned order was set aside, providing consequential relief to the appellants.

Issue 3:
The third issue involved the appropriation of the recovered amount against the demand. The Tribunal's analysis of the case's overall facts and circumstances led to the conclusion that the impugned order lacked substantiation of clandestine removal. Consequently, the appeals were allowed, providing relief to the appellants. The judgment highlighted the importance of concrete evidence in establishing liability and the necessity to investigate key aspects to support allegations effectively.

In conclusion, the Tribunal's detailed analysis emphasized the critical role of tangible evidence in proving allegations of clandestine activities and liability. The judgment underscored the significance of thorough investigations and corroborative evidence to support claims effectively in excise duty cases.