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2013 (9) TMI 459 - AT - Central ExciseClandestine removal - CENVAT credit Demand - Penalty - shortage of goods - Held that - COMMISSIONER OF C. EX., KANPUR Versus RAGHUNATH INTERNATIONAL LTD. 2009 (2) TMI 620 - CESTAT, NEW DELHI - mere shortage of finished goods cannot be equated with clandestine clearance in absence of other evidence and in such a situation penalty u/s 11AC of Central Excise Act, 1944 is not warranted - there was no corroborative evidence that short found finished goods were clandestinely cleared nor it had been so admitted by the assesse. Mere signing of the chart alleging removal of finished goods cannot be treated as clear admission of the clandestine removal - Moreover, diary on which the reliance has been placed only contains the vehicle numbers which had left the factory - There was no indication as to whether those vehicles had carried finished products and if cleared had also been taken on presumption basis which was not permissible - once the Commissioner (Appeals) gives this finding, his earlier finding of upholding the demand merely because the Director of the appellant-company had admitted the same would become unsustainable. The duty demand against the assesse was not sustainable - the order upholding the duty demands against the assesse and also upholding the cenvat credit demand and penalty was not sustainable - there was nothing in the statement of Director of the assesse-company from which it can be inferred that he had admitted the clandestine removal of the goods found short or that he had admitted that the exit vehicles mentioned in the diary had carried finished goods removed without payment of duty. Decided in favor of assesse.
Issues Involved:
1. Shortage of finished goods. 2. Alleged clandestine removal of finished goods. 3. Excess availed CENVAT credit. Detailed Analysis: 1. Shortage of Finished Goods: The appellant, a rolling mill, was found to have shortages of 3.374 M.T. of M.S. Flats and 2.562 M.T. of round bars during a stock-taking exercise by central excise officers. The duty involved for these shortages was Rs. 29,740/-. The Director of the appellant company admitted the shortage and paid the duty on the same day. 2. Alleged Clandestine Removal of Finished Goods: During the search, a notebook was found containing details of vehicle entries and exits. The officers inferred that these vehicles were used to clear 104.566 M.T. of finished goods without invoices, resulting in a duty evasion of Rs. 4,28,451/-. The Director signed a chart prepared by the officers and agreed to pay the duty, which was paid on the same day. The Commissioner (Appeals) upheld the duty demand but set aside the penalties, citing lack of corroborative evidence for clandestine removal. The appellant argued that the notebook only contained vehicle numbers without any mention of the goods carried, making the duty demand unsustainable. 3. Excess Availed CENVAT Credit: The appellant availed excess CENVAT credit of Rs. 11,014/- on rolls for rolling mills, treating them as inputs instead of capital goods. The Commissioner (Appeals) upheld the demand and penalty for this excess credit. The appellant contended that the balance credit would be available in the next financial year, making the confirmation of the demand and penalty unjustified. Judgment: Excess Availed CENVAT Credit: The Tribunal found that the appellant would be eligible for the balance CENVAT credit in the next financial year. Therefore, the confirmation of the CENVAT credit demand of Rs. 11,014/- and the penalty was not sustainable. Duty Demand on Shortage of Finished Goods: The Tribunal noted contradictory findings by the Commissioner (Appeals). While the Commissioner (Appeals) upheld the duty demand based on the Director's admission, he also stated that the charge of clandestine removal was not proved due to lack of corroborative evidence. The Tribunal found no clear admission of clandestine removal in the Director's statement and held that the duty demand of Rs. 4,58,191/- was unsustainable. Alleged Clandestine Removal: The Tribunal emphasized that the notebook only contained vehicle numbers without any details of the goods carried. The duty demand based on presumed quantities was not permissible. The Tribunal cited several judgments, including Ambika Chemicals v. CCE and Gurpreet Ind. v. CCE, which held that charges of clandestine removal must be supported by corroborative evidence. Conclusion: The Tribunal set aside the impugned order upholding the duty demands and the CENVAT credit demand with penalties. The appeal was allowed, and the duty demands and penalties were deemed unsustainable due to lack of corroborative evidence and the appellant's eligibility for the balance CENVAT credit in the next financial year.
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