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2021 (12) TMI 957 - AT - Central ExciseClandestine Removal - excess production in respect of CPC over and above the ER 1/ER 4 return - It is the case of the Appellant that the duty can only be demanded in the present case if the basic allegation of clandestine removal is proved against them, which has not at all been discussed or touched upon by the Ld. Adjudicating Authority - time limitation - HELD THAT - The Appellant has been able to produce the relevant reconciliations to explain the differences in clearance figures as per ER 1 and as per form 3CD which was on account of inclusion of 7031.42 MT twice by considering the conversion from CPC ROK to CPC Screen and CPC fines in captive consumption details and yield of finished products both in the annexure to the Tax Audit report. The demand has been raised for the period 2013-14 in 2018 onwards whereas the spot memo was issued by the Department in 2016 itself. No explanation has been furthered by the Department in respect of such gross delay in proceeding with the matter. Therefore, invocation of the extended period of limitation is not justified. Thus, demand of excise duty only on assumptions and presumptions in quantity of clearance of finished goods figures of Tax Audit form 3CD and ER 1 cannot be sustained both on merits and on limitation and is accordingly set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Legitimacy of the excise duty demand based solely on discrepancies between tax audit reports and ER 1/ER 4 returns. 2. Validity of the reconciliation provided by the Appellant. 3. Allegation of clandestine removal of goods. 4. Applicability of the extended period of limitation for issuing the demand notice. Detailed Analysis: 1. Legitimacy of the Excise Duty Demand: The Appellant contested the demand of ?2,53,48,269/- excise duty for the period 2013-14, arguing that it was based solely on figures in the tax audit report without substantive allegations. The discrepancy arose from the conversion of Calcined Petroleum Coke (CPC) into various grades, which was inadvertently counted twice in the tax audit report. The Tribunal noted that the Adjudicating Authority confirmed the demand based on differences in production figures between ER 1 and Form 3CD without considering the Appellant's explanations and reconciliation. 2. Validity of the Reconciliation: The Appellant provided detailed reconciliations supported by certificates from the Tax Auditor, explaining the differences between ER 1 and Form 3CD. The Tribunal found that the Appellant successfully demonstrated that the alleged excess production was due to the double counting of 7031.42 MT in the tax audit report. The Tribunal acknowledged that the production ratio of 1.3:1 to 1.40:1 was consistent with the actual production figures, thus invalidating the department’s claim of excess production. 3. Allegation of Clandestine Removal: The Tribunal emphasized that the department failed to provide any evidence of clandestine removal, such as unaccounted cash, statements from buyers or transporters, or extra production. The Tribunal cited several judgments, including *Commissioner Of C. Ex., Patna Versus Universal Polythelene Industries* and *Sri Durga Cables Pvt. Ltd. Versus Commr. Of C. Ex. & Cus., Bhubaneswar-I*, which held that allegations of clandestine removal must be substantiated with concrete evidence. The Tribunal concluded that the department's claim was based solely on assumptions and discrepancies in figures, without any corroborative evidence. 4. Applicability of the Extended Period of Limitation: The Tribunal noted that the demand notice was issued in May 2018 for the period 2013-14, well beyond the normal period of limitation. The spot memo was issued in April 2016, indicating that the department was aware of the facts much earlier. The Tribunal found no justification for invoking the extended period of limitation, as there was no evidence of suppression or willful misstatement by the Appellant. Conclusion: The Tribunal set aside the impugned order, finding that the demand of excise duty was unsustainable both on merits and on the grounds of limitation. The appeal filed by the Appellant was allowed with consequential relief as per law. The judgment emphasized the need for substantive evidence in cases of alleged clandestine removal and upheld the validity of reconciliations provided by the Appellant.
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