2021 (10) TMI 300 - AT - Central Excise

Clandestine removal - shortage of raw material and excess of finished goods - entire case was made out on the basis of Income Tax investigation - no corroborative evidence produced - HELD THAT - There is no dispute that show cause notices were issued and demand was confirmed only on the basis of investigation carried out by Income Tax department. On physical stock taking by the Central Excise department, no difference was found. Since the entire case was made out on the basis of Income Tax investigation and no independent evidence was brought on record by Central Excise department, the demand cannot be sustained. In a common investigation by the department, another case was made out against one of the units of the appellant, wherein this Tribunal considered the same set of facts and legal position relying on the judgments in the case of Ravi Foods Pvt. Limited vs. CCE, Hyderabad 2010 (12) TMI 290 - CESTAT, BANGALORE where it was held that The adjudicating authority having not given any positive findings as regards the clandestine manufacturing and clearance of the goods, in itself would indicate that the said charges as alleged against the appellants were not proved. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Identical issue of shortage of raw material and excess of finished goods based on Income Tax investigation.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad involved appeals concerning shortage of raw material and excess of finished goods, both cases based on Income Tax investigation. The appellant argued that the Central Excise department solely relied on the Income Tax investigation without any independent evidence, making the case unsustainable. The appellant cited a previous Tribunal judgment in a similar investigation where the demand was set-aside, indicating that the present cases were off-shoots of the same investigation. The Revenue, represented by the Superintendent, reiterated the findings of the impugned order. Upon careful consideration, the Tribunal noted that no difference was found on physical stock taking by the Central Excise department, and since the demand was solely based on the Income Tax investigation without independent evidence, it could not be sustained. The Tribunal referred to various legal precedents and the appellant's previous case where the demand was set-aside due to lack of independent investigation by the Central Excise department. Based on the previous judgment and the lack of merit in the Revenue's case, the impugned orders were set-aside, and the appeals were allowed.

This detailed analysis showcases how the Tribunal addressed the issues raised by the parties, emphasizing the importance of independent evidence in such cases and relying on legal precedents to reach a decision.