2019 (8) TMI 1296 - AT - Central Excise

Clandestine removal - Oxygen - appellant prepared Annual Statistics Report. On the basis of Annual Statistics Report for the year, 2001-2002, it was seen that they have consumed oxygen of 80660.124 Cu. Mtr. ; whereas in their RT-12 Returns, they have shown consumption of 1,38,780.948 Cu. Mtr. - HELD THAT - We find that the appellants submitted that at Page 429 of the Annual Report, it cannot be seen in isolation and at other pages i. e 369 197 also show the consumption of oxygen gas internally. The Learned Commissioner has not given any reasoning for not considering the statistics reflected in other pages and has concluded that the appellants have not shown any reasons as to why such figures were shown in Page 429 of the Annual Statistics Reports. We find that no other effort has been made by the Department to find as to what has happened to the balance quantity, if at all, there was a discrepancy. No statements were recorded and no proof of any clandestine removal, transportation of the same and financial transaction in that regard are put forth. Understandably, clandestine removal is a serious charge. Without prima-facie, establishing the fact that there has been a clandestine removal (if not with an arithmetical precision), such an allegation, will not survive. It is seen that not even a statement of the person, who managed the production/consumption of oxygen or the person who has maintained the statistical report, has been recorded by the Revenue. Without such bare a minimum enquiry, the charge of clandestine removal, cannot be sustained. Extended period of limitation - HELD THAT - The appellant, being a Public Sector Undertaking, no mens rea can be attributed as no particular independent officer of the appellant is going to be benefited by such act of suppression and concealment of figures - It is the not the case of the Department that Annual Book of Statistics has been recovered during any search or investigation. The Book has been routinely given by the appellant to the Department over the years - Department can not allege suppression of facts etc to invoke extended period of limitation. The demand is not sustained either on merits or on limitation - penalty also not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged clandestine removal of goods without payment of duty, discrepancy in oxygen consumption figures, applicability of case laws, limitation period for issuing show-cause notice.

In this case, the appellant, a manufacturing company engaged in iron and steel production, was accused of clandestinely removing oxygen gas without paying duty. The discrepancy arose from different oxygen consumption figures reported in the Annual Statistics Report and the RT-12 Returns. The Revenue alleged that the difference indicated goods were removed without payment. The appellant argued that the discrepancy was a mistake and cited various case laws to support their position, emphasizing the need for corroborative evidence to prove clandestine removal. They also contended that the issue was time-barred. The Department, however, relied on a judgment highlighting significant discrepancies as grounds for confirming duty. The Tribunal noted the discrepancy in oxygen consumption figures and the lack of further investigation or evidence of clandestine removal. The Tribunal found the Department's case lacking as no statements were recorded, and no proof of removal or financial transactions were provided. The Tribunal emphasized the seriousness of the charge of clandestine removal and the need for establishing facts before sustaining such allegations. Additionally, the Tribunal highlighted the absence of evidence supporting the Department's claims and noted that the case was beyond the limitation period for issuing a show-cause notice. The Tribunal concluded that the demand for duty and penalty were not sustainable either on merits or limitation grounds, ruling in favor of the appellant and setting aside the impugned order. The appeal was allowed, providing consequential relief to the appellant. The judgment was delivered on 29.08.2019 by the Appellate Tribunal CESTAT KOLKATA.