2023 (5) TMI 380 - AT - Central Excise

Clandestine removal of goods - electricity consumption - minor shortages in stock of finish goods ascertained through eye estimation - existence of corroborative evidences - suppression of production - period from 2003 to 2007 2007 to 2009 and Sept. 2009 to July 2010 - HELD THAT - It is to be noted here that basing on circumstantial evidence alone duty demand is confirmed since no evidence concerning clandestine removal of goods from the factory of the appellant without payment of duty in unaccounted manner is noticed by the Department during the investigation and minor shortages available in output record was on eye estimation alone which appellants claim to be either erroneous or process loss since input are clearly accounted for and input stock matching with the stock register. Further it has been consistently held by this Tribunal ever since pronouncement of the judgment in R.A. Casting Pvt. Ltd. 2008 (6) TMI 197 - CESTAT NEW DELHI that excess electricity consumption cannot be a parameter to establish clandestine removal and with reference to other ancillary factors which respondent Department attributes to be of corroborative evidence it can be stated that loss or marginal profit noted in the accounting statements none reflection of runners and risers factor in the register that accounted only 3 to 4% of ingots commission income or weighment income etc. would in no way establish higher production in the factory that would only lead to the possibility of clandestine removal. On suspicion alone no liability can be fastened on any individual and we reiterated the observation made by this Tribunal in Shri Mithunlal Gupta case 2019 (6) TMI 190 - CESTAT MUMBAI that Article 265 of the Constitution of India dictates that no tax shall be levied or collected except by authority of law. Unless the manufacturing of the steel ingots is proved to the hilt by authentic reliable and credible evidence duty cannot be demanded on the basis of hypothesis and theoretical calculation without taking into consideration the ground realities of the functioning of the factories. It is a settled principal of law that suspicion how so ever strong cannot take place of proof - Appeal allowed.

Summary

Issues Involved:
The legality of confirmation of demand, interest, and penalty by the Commissioner of Central Excise & Customs against the appellant company and its Director for clandestine removal of goods based on electricity consumption and other evidence from 2003 to 2010 is challenged in the appeals.

Summary:
In the three appeals, the appellant company's confirmation of demand, interest, and penalty by the Commissioner for alleged clandestine removal of goods is contested. The investigation revealed discrepancies in electricity consumption and production of ingots, suggesting excess production. The appellant argued that electricity consumption varies due to various factors and questioned the credibility of technical reports. The Department relied on circumstantial evidence to establish clandestine activity, while the appellant emphasized the lack of concrete evidence. The Tribunal noted that excess electricity consumption alone cannot prove clandestine removal and emphasized the need for tangible evidence. Citing previous judgments, the Tribunal concluded that suspicion cannot replace proof, leading to the allowance of the appeals and setting aside of the Commissioner's orders.

Separate Judgement:
The order was pronounced by Dr. Suvendu Kumar Pati, Member (Judicial), and the appeals were allowed, setting aside the Commissioner's orders dated 31.03.2009, 26.02.2010, and 17.01.2013.