2023 (7) TMI 1175 - AT - Central Excise

Clandestine Removal - documents seized by the investigating team from the residence of the Accountant - corroborative evidence or not - HELD THAT - Admittedly, the Revenue has not come up with evidence of receipt of raw materials used for clandestine manufacture of the finished goods, manufacturing of finished goods with the installed capacity of consumption of electricity, labour deployment and payment made to them. No evidences were in regard to the discrepancies in the stock of raw materials and finished goods with reference to the entries in the factory premises and transportation documents, amount of receipts, buyer of the goods etc. No such effect has been made by the Revenue to allege clandestine removal of goods. Although, the said records contains certain names therein, but the Revenue has not examined these persons. The charge of clandestine removal of goods is not sustainable against the appellant - It is also noted that the annual turnover of the appellant is less than the below of threshold limit for availment of exemption Notification No.08/2003-CE dated 01.03.2003. The impugned demand is not sustainable. Accordingly, the same is set aside and the appeal is allowed.

Summary

Issues involved:
The issues involved in this case are clandestine removal of goods and eligibility for exemption under Notification No.8/2003-CE dated 01.03.2003.

Clandestine Removal of Goods:
The appellant was accused of clandestine removal of goods leading to a demand of duty amounting to Rs.2,81,92,244 for the period 19.06.2016 to 31.03.2017 based on documents seized during an investigation. The appellant contested this allegation stating that the evidence was insufficient and relied on previous tribunal decisions to support their argument. The Revenue based its case solely on documents recovered from the Accountant's residence, without providing concrete evidence of raw material receipt, manufacturing process, discrepancies in stock records, or transportation details. The tribunal found the lack of corroborative evidence and examination of involved persons as fatal to the Revenue's case, ultimately ruling in favor of the appellant.

Exemption under Notification No.8/2003-CE:
The appellant claimed eligibility for exemption under Notification No.8/2003-CE due to being a small-scale unit with a turnover below the threshold limit. The annual turnover for the financial year 2016-17 was found to be less than the threshold, thus entitling the appellant to the exemption. This fact, combined with the dismissal of the clandestine removal charge, led to the impugned demand being deemed unsustainable and set aside by the tribunal.

Judgement Summary:
The tribunal, after considering the arguments presented by both parties, found the Revenue's case of clandestine removal of goods lacking in concrete evidence and corroboration. The reliance on documents seized from the Accountant's residence without further investigation into raw material procurement, manufacturing process, and transportation details was deemed insufficient. Additionally, the appellant's eligibility for exemption under Notification No.8/2003-CE was established due to their turnover falling below the threshold limit. Consequently, the tribunal set aside the impugned demand and allowed the appeal in favor of the appellant.