2022 (9) TMI 739 - AT - Central Excise

Clandestine Removal - Lead Ingots - department allegedly found evidences regarding unrecorded production and clandestine clearances of Lead Ingots - demand based on assumptions and presumptions - corroborative evidences or not - Confiscation - redemption fine - penalty - HELD THAT - Admittedly the order of the Commissioner (Appeals) in the 2nd show cause notice, by which demand has been dropped, has been accepted by the department. The order of Adjudicating Authority in the 1st show cause notice has been reversed by the learned Commissioner only on that basis without discussing about any tangible evidence, as according to him in the 2nd show cause notice as well as in the order of Commissioner (Appeals) therein, nothing has been recorded regarding the goods seized at the factory premises i.e. 44531.50 kgs. of Lead Ingots, which in my opinion is totally misplaced. A perusal of the 2nd show cause notice as well as the order of the learned Commissioner (Appeals) therein would show that the issue in both 1st and 2nd show cause notices is identical i.e. clandestine removal of goods and both the notices are based on the search conducted on 16.7.2013. It can safely be said that the further investigation as well as the issuance of 2nd show cause notice is the result of seizure of 44531.50 Kgs. of Lead Ingots from the premises of the Appellant on the premise that the appellant is into clandestine removal of the goods - when the learned Commissioner while dropping the demand in the 2nd show cause notice has examined the chart regarding the manufacturing activity under taken by the Appellant for the period from April, 2012 to July, 2013 then that would also include the Lead Ingots, which according to revenue must have been produced somewhere between May, 2013 upto the date of search i.e. 16.7.2013 and which is the core issue in the 1st show cause notice herein. A perusal of the 1st Show cause notice, which is presently in issue, would show that it is based on the statements of Mr. Mukesh Maheshwari as well as the statement dated 23.7.2013 of Shri Shyam Singh Jadon, Excise Assistant of the appellant coupled with RG-1 register - Admittedly, a particular act is required to be done in a particular manner as provided under the statute but an inadvertent mistake to follow the procedural aspect cannot be adopted for arriving at the conclusions against the assessee. In view of the fact that in the 2nd show cause notice, the Commissioner (Appeals) has held in favour of the appellant herein and dropped the demand coupled with the discussions made in preceding paragraphs, this case would not fall within the four corners of either Section 34 or Rule 25. Therefore, the confiscation or redemption fine or penalty are not sustainable and the impugned order is liable to be set aside. Appeal allowed.

Summary

Issues:
Challenging order of Commissioner (Appeals) regarding confiscation of Lead Ingots; Conflicting decisions in 1st and 2nd show cause notices; Justification for redemption fine and penalty.

Analysis:
1. Challenging Commissioner (Appeals) Order: The appeal was filed against the order of the Commissioner (Appeals) directing redemption fine and penalty for the confiscation of Lead Ingots found unaccounted in the factory premises. The Adjudicating Authority initially confirmed the demand raised in the 2nd show cause notice, but the Commissioner (Appeals) set aside the demand, which was accepted by the department. However, the Commissioner (Appeals) reversed the order of the Adjudicating Authority in the 1st show cause notice, leading to the current appeal challenging the confiscation order.

2. Conflicting Decisions: The central issue revolved around the conflicting decisions in the 1st and 2nd show cause notices regarding the alleged clandestine removal of goods. The Commissioner (Appeals) in the 2nd show cause notice dropped the demand, citing lack of tangible evidence and reliance on assumptions and presumptions. The Commissioner's decision was based on the absence of evidence supporting clandestine removal, such as power consumption records or excess raw material procurement. The Commissioner found procedural lapses but emphasized the necessity of corroborative evidence to justify confiscation, redemption fine, or penalty.

3. Justification for Redemption Fine and Penalty: The Tribunal analyzed the facts surrounding the seizure of Lead Ingots and the subsequent show cause notices. It was noted that the issue in both notices was identical, focusing on the alleged clandestine removal of goods based on the search conducted in 2013. The Tribunal highlighted the importance of evidence and the burden of proof on the department to establish unaccounted production. Procedural lapses were acknowledged, but the Tribunal emphasized that inadvertent mistakes should not lead to conclusions of clandestine removal without substantial evidence. Ultimately, the Tribunal found that the confiscation, redemption fine, and penalty were not justified, leading to the appeal being allowed with consequential relief.

In conclusion, the Tribunal's detailed analysis focused on the conflicting decisions, the necessity of corroborative evidence for confiscation, and the importance of procedural compliance in determining the liability for redemption fine and penalty. The judgment underscored the significance of evidence and burden of proof in cases involving alleged clandestine activities, ultimately leading to the appeal being allowed in favor of the appellant.