2015 (10) TMI 120 - AT - Central Excise

Duty demand - Clandestine removal of goods - Whether the appellant is entitled to claim the burning loss of 5.8% or not and whether the appellant succeeds on limitation or not as directed by the remand order of this Tribunal dated 25-7-2005 - Held that - Appellant has explained that there is a burning loss in the manufacturing process. Therefore, as there is some mistake in recording the statutory records about the burning loss, the Revenue cannot claim that there is a clandestine removal of the goods. - burning loss varies from 3 to 16.7%. This record has not been controverted by the Revenue. If the average is to be taken it will come out about 10% of burning loss. Moreover, this Tribunal also held in the case of Bansal Steel Corporation (1996 (10) TMI 309 - CEGAT, MUMBAI) the burning loss in such activity can occur upto 10%. Admittedly in this case the appellant has claimed the burning loss is 5.8%. Therefore, the appellant has been able to prove the burning loss of 5.8% is appropriate. In these circumstances, as there is no supporting evidences of clandestine removal, the appellant is entitled for burning loss of 5.8% as claimed by the appellant. - appellant has explained that their activities, involves process of heating, hammering and forging certain scaling appears on the top skin of the MS Block and claimed burning loss but the department has not taken any steps to verify whether there is burning loss as claimed by the appellant but merely alleged clandestine removal of the goods. The show cause notice has been issued by invoking extended period of limitation and admitted that these is burning loss. In these circumstances, the allegation of clandestine removal of goods is not sustainable. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
- Allegation of clandestine removal of goods
- Claim of burning loss during manufacturing process
- Determination of burning loss percentage
- Applicability of extended period of limitation

Analysis:
1. Allegation of Clandestine Removal of Goods:
The appellant, engaged in manufacturing MS/SS Forged articles, faced allegations of clandestine removal of goods leading to duty confirmation, interest, and penalty imposition. The appellant contended that burning loss during manufacturing was the reason for apparent shortages, seeking recognition for the same.

2. Claim of Burning Loss:
The appellant asserted a burning loss during the manufacturing process, attributing shortages to this factor. The appellant highlighted the absence of concrete evidence supporting clandestine removal and emphasized the need for accurate consideration of burning loss in determining shortages.

3. Determination of Burning Loss Percentage:
The issue of burning loss percentage was crucial in this case. The appellant claimed a burning loss of 5.8%, supported by variations in burning loss percentages in similar activities. The Tribunal noted discrepancies in the Commissioner's determination of 2% burning loss and accepted the appellant's claim of 5.8% burning loss based on manufacturing process specifics.

4. Applicability of Extended Period of Limitation:
The appellant raised concerns about the extended period of limitation, arguing that the Revenue's failure to address burning loss queries precluded invoking extended limitation. The Tribunal concurred, ruling in favor of the appellant on both the merits of burning loss and the limitation issue.

In conclusion, the Tribunal found in favor of the appellant, acknowledging the burning loss claim of 5.8% and dismissing allegations of clandestine removal of goods due to lack of supporting evidence. The decision set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.