2019 (7) TMI 1173 - AT - Central Excise

Clandestine removal - SSI Exemption - goods were removed under simple delivery challans, without accompanying with Central Excise invoices - the department has solely considered the hand written private records prepared by Shri Satish Batra to hold that the same are the sales invoices issued by the Appellant No.1 - HELD THAT - It transpires that the private records reflected the particulars of bills raised by the job workers, showing quantum of material received, consumed for manufacture of resultant final product, generation of scrap and the job work charges. Further, it is also noticed that the submissions of the appellant No.1 that it had maintained the job work register and the daily stock account, reflecting the transaction particulars, were not considered by the adjudicating authority inasmuch as no such findings were recorded by him in the impugned order. In the reply to show cause notice dated 03.04.2002, the appellant no.1 had submitted the evidences of exports with statutory documents and the remittances received by it towards exportation of goods. The department had not adduced any material evidence to show purchase of excess raw material, manufacture of alleged final product, electricity consumption and other evidences etc. to demonstrate that the appellant had in fact, clandestinely manufactured and cleared the final product out of the factory premises, without payment of central excise duty. Thus, in absence of proper substantiation of the allegation of clandestine removal, the charges leveled against the appellants cannot be sustained for confirmation of the adjudged demands. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged clandestine removal of goods without payment of Central Excise duty.
2. Confirmation of duty demand, interest, and penalties by the adjudicating authority.
3. Validity of evidence and findings considered by the department.
4. Applicability of case law in absence of corroborative evidence.
5. Arguments presented by both parties regarding the alleged clandestine removal.

Analysis:

Issue 1: Alleged clandestine removal of goods without payment of Central Excise duty
The case involved M/s Braco Electricals allegedly removing goods clandestinely to M/s The Brihan Mumbai Electric Supply & Transport Undertaking without paying Central Excise duty. The department observed discrepancies in stock levels and private records, leading to evasion of duty and exceeding SSI exemption limit. The adjudicating authority confirmed duty demand, interest, and penalties based on findings of clandestine removal.

Issue 2: Confirmation of duty demand, interest, and penalties by the adjudicating authority
The impugned order dated 30.12.2005 confirmed a Central Excise duty demand of ?49,45,041/- along with interest and imposed penalties on the appellants. The authority found the appellants failed to provide evidence that sales to BEST were purely trading, and goods were removed clandestinely, contravening Central Excise Rules.

Issue 3: Validity of evidence and findings considered by the department
The department relied on private records to allege clandestine removal, disregarding the appellant's job work register and daily stock account. The adjudicating authority did not consider evidence of exports, waste and scrap sent for recycling, and duty paid goods supplied to BEST. Lack of material evidence on excess raw material purchase and electricity consumption raised doubts on the allegations.

Issue 4: Applicability of case law in absence of corroborative evidence
The appellants argued that charges of clandestine removal based solely on private records were unsubstantiated. They cited precedents emphasizing the need for corroborative evidence like procurement records and transaction flow. The Tribunal found the case aligned with previous decisions, requiring proper substantiation for allegations.

Issue 5: Arguments presented by both parties regarding the alleged clandestine removal
The appellants contended that private records were not conclusive evidence of clandestine removal, emphasizing the lack of corroborative proof. The Revenue maintained the findings in the impugned order were valid, considering statutory and private records. The Tribunal, after reviewing submissions and case records, concluded that the charges of clandestine removal were not adequately supported, leading to the reversal of the duty demands and penalties imposed.

This detailed analysis of the judgment highlights the key issues, arguments, and findings, providing a comprehensive understanding of the legal proceedings and decision-making process in the case.