2010 (1) TMI 485 - HC - Central Excise

Clandestine Removal - Whether the Tribunal committed error in not considering the fact that there is voluntary confessional statement of the director of the company about clandestine removal of good belonging to the assessee? Whether the Tribunal committed an error in ignoring the fact that director of the company in his voluntary confessional statement admitted clearance of goods without accounting for production is binding to the Assessee? Held that - no findings that loss occurred was unreasonable. Loss claimed was verified as based on records and not amounting to clandestine removal of goods. No clear admission that goods were clandestinely removed. Case involving finding of fact and substantial question of law not arises.

Summary

Issues:
1. Consideration of voluntary confessional statement about clandestine removal of goods.
2. Ignoring the binding nature of director's voluntary confessional statement on clearance of goods without proper accounting.

Analysis:
1. The Tax Appeal was filed by the Commissioner of Central Excise, Ahmedabad-II, proposing substantial questions of law for determination. The first issue raised was whether the Tribunal erred in not considering the voluntary confessional statement of the company director regarding clandestine removal of goods. The Deputy Commissioner had confirmed a demand under the Central Excise Act, and a penalty was imposed on the assessee. The Commissioner (Appeals) observed that losses in manufacturing processes are expected, and unless they are unreasonable or mis-declared, no demand can be raised. The Commissioner was satisfied with the explanation provided for the nominal shortage of goods, based on natural processes like drying and packing. Consequently, the Commissioner set aside the original order and allowed the appeal.

2. The second issue questioned whether the Tribunal erred in ignoring the director's voluntary confessional statement admitting clearance of goods without proper accounting. The CESTAT confirmed the Commissioner's decision, noting that besides the statement, there was no other evidence of clandestine clearance. The Revenue's case relied solely on statutory records, and there was no proof of unreasonable or mis-declared losses. The CESTAT upheld the decision based on the absence of evidence supporting clandestine removal. The appellant's losses were found to be based on records and not indicative of evasion. The appellant cited Supreme Court decisions, but the court found them inapplicable to the present case due to the concurrent factual findings of both authorities.

In conclusion, the High Court summarily dismissed the appeal, stating that no substantial question of law arose from the CESTAT's order. The court emphasized the absence of findings on unreasonable losses or clear admission of clandestine removal, affirming the decision based on factual assessments by the authorities.