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2023 (7) TMI 357 - AT - Central ExciseClandestine Removal - difference in the figures of audit report and ER-1 return - invocation of extended period of limitation - HELD THAT - As revenue has raised the demand only on the basis of difference in the figures of audit report and ER-1 return which were available with them in time, in that circumstances as held by this Tribunal in the case M/S. TALLY SOLUTIONS PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-I COMMISSIONERATE BANGALORE 2013 (11) TMI 1080 - CESTAT BANGALORE the extended period of limitation is not invocable as show cause notice for the period 2006-07 has been issued on 01.03.2011 by invoking extended period of limitation. It is found that time and again it is held by the judicial pronouncements that merely on the basis of difference in the figures of audit report and ER-1 return without establishing the parameters of clandestine manufacture and removal of goods, the charge of clandestine removal is not sustainable. Therefore, on merits also, in the absence of any statement or investigation against the appellant with corroborative evidence, the impugned order is not sustainable. Accordingly, the same is set aside. Appeal allowed.
Issues involved:
The issues involved in the judgment are the challenge against the demand of central excise duty, interest, and penalty imposed on the appellant for alleged clandestine removal of goods. Details of the judgment: Issue 1: Alleged suppression of production and evasion of central excise duty The appellant was alleged to have suppressed the production of steel ingots and rolled products, leading to evasion of central excise duty amounting to Rs.51,02,506. The discrepancy in figures between financial records and daily stock accounts raised suspicions of clandestine removal of goods. Issue 2: Alleged clearance of goods without payment of duty Further scrutiny revealed discrepancies in the consumption of steel ingots, with a significant quantity not accounted for in the daily stock account. This discrepancy indicated that rolled products might have been cleared without payment of duty, amounting to Rs.48,41,477. Issue 3: Discrepancies in sale of rolled products The appellant was found to have discrepancies in the sale of rolled products, with a portion of sales not reflected in the daily stock account. This discrepancy suggested that goods worth Rs.15,04,820 were cleared without payment of duty. Decision and reasoning: The Tribunal noted that the demand of duty was based on differences in figures between the audit report and ER-1 return for the year 2006-07. Despite the discrepancies, no investigation was conducted to establish clandestine removal of goods. Citing previous cases, it was emphasized that mere differences in figures without concrete evidence of clandestine activities are insufficient to sustain the charge. The Tribunal set aside the impugned order, holding that the appellant's appeal was allowed with consequential relief. Precedent rulings: The judgment referenced previous cases such as Chanduka Hi-Tech Steel Pvt.Ltd. v. CESTAT, Kolkata, and highlighted the necessity of tangible evidence to prove allegations of clandestine activities. The Tribunal also cited the case of Continental Cement Company v. Union of India, emphasizing the importance of corroborative evidence in proving clandestine sales. Additionally, the case of Tally Solutions Pvt.Ltd. v. CCE, Bangalore was mentioned to support the argument against invoking the extended period of limitation based solely on discrepancies in figures. Conclusion: The judgment concluded that without concrete evidence and investigations to support the allegations of clandestine removal of goods, the charge was not sustainable. The impugned order was set aside, and the appeal of the appellant was allowed with consequential relief.
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