2014 (3) TMI 710 - AT - Central Excise

Evasion of duty - Clandestine removal of goods - Private register showing the production and sale of three months recovered from the assessee office - Held that - sugar was being used in other preparations also besides preparation of basic mix such as chikki, orange bar syrup, crunchy chocolate, ripples etc. In this regard I find that the Range Superintendent of Central Excise range-IV Bhopal vide his letter dated 26.04.2001 has verified the assessee s claim and certified that sugar was being used by them for the preparation of basic mix, orange bar syrup, for making chikki for butter scotch and crunchy chocolate, for making ripples. He has also certified the total sales of orange bars, butterscotch, and crunchy chocolate and ripple flavor ice creams as submitted by the assessee. Thus after going through the report of the range Superintendent I find that the quantity of ice cream manufactured cannot be determined correctly by taking consumption of sugar because sugar is being used in manufacture of other goods also which have a high sugar base. Assessee was also engaged in the manufacture of various types of other products, requiring use of sugar, the said fact cannot be made the basis for clandestine activities. Otherwise also, I find that it is well settled law that charges of clandestine removal cannot be made on the basis of alleged consumption of one of the raw materials - As regards the challans recovered from the dealers of the assessee I find from records that the investigating officers have not brought any evidence to co-relate the same with any other evidence such as transportation of goods, receipt of payment for such supplies - Decided against Revenue.

Summary

Issues:
Alleged evasion of duty based on consumption of sugar, private register recovered from the assessee office, and recovery of challans from dealers.

Analysis:
The case involves an appeal by the Revenue against the order passed by the Commissioner in denovo proceedings. The proceedings were initiated against the respondents, engaged in the manufacture of ice cream, for the recovery of duty in relation to allegedly clandestinely removed ice cream. The main basis for alleging duty evasion included the consumption of sugar, a private register showing production and sales, and recovery of challans from dealers. The Tribunal had remanded the matter to the Commissioner for fresh decision, focusing on the consumption of sugar. The Commissioner considered various aspects, including the usage of sugar in other preparations besides ice cream, waste in the manufacturing process, and the lack of tangible evidence to prove clandestine removal. The Commissioner's decision was supported by the Range Central Excise authorities' report, emphasizing that charges of clandestine removal cannot be solely based on the alleged consumption of one raw material.

Regarding the private register recovered from the assessee's office, the Commissioner found that there was no corroborative evidence of supply, transportation, or receipt of payment for the goods mentioned in the register. The register covered only a specific period, which was already included in the overall demand calculation based on sugar consumption. Since the register was disowned by the assessee and lacked reliable evidence, the demand based on it was deemed unsustainable. Similarly, in the absence of direct evidence linking the recovered challans from dealers to clandestine removal, the adjudicating authority found no merit in upholding the allegations of evasion based on this evidence.

Ultimately, the Commissioner rejected the Revenue's appeal, emphasizing the necessity of corroborative evidence and tangible proof to establish charges of clandestine removal. The judgment underscores the importance of thorough investigation and reliance on concrete evidence to substantiate allegations of duty evasion.