2015 (10) TMI 1649 - AT - Central Excise

Clandestine removal of goods - Shortage of goods - Held that - weighment done at the time of investigation is correct but the learned Commissioner (Appeals) has considered the production of whole of the manufacture to determine the goods produced on 18-12-2010 and 19-12-2010 whereas at the time of investigation production of these two days was taken into consideration as 36 and 66 MT but production during the period was found by the learned Commissioner (Appeals) from the statutory records as in the range of 80.80 to 93.40 MT per day. Therefore, conclusion drawn by the revenue with regard to production on 18-12-2010 and 19-12-2010 of 36 MT and 66 MT is totally incorrect. In these circumstances, I do agree with the observations of the learned Commissioner (Appeals) in the impugned order and thereafter holding that there was no excess production was done by the appellant during that period. Further, the case law relied upon by the learned AR is not relating to the facts of this case as in that case the raw material was found in excess which was not entered in the statutory records. In this case, the allegation against the respondent is that respondent has manufactured the excess goods to clear clandestinely. Therefore the case law relied upon by the learned AR is not applicable to the facts of this case. As discussed above, if the production of two days i.e. 18-12-2010 and 19-12-2010 are taken into consideration as per previous day s production, in that way, there is no excess production made by the appellant during this time, no excess stock could be found. In these circumstances, I do not find any infirmity in the impugned order. - Decided against Revenue.

Summary

Issues: Revenue appeal against dropped demand due to excess stock found during physical verification based on estimation without corroborative evidence.

In this case, the main issue revolves around the appeal filed by the Revenue against the dropped demand due to excess stock found during physical verification at the factory of the respondents. The impugned order dropped the demand, stating that the excess stock was based on estimation and that the Revenue failed to produce any corroborative evidence to support the allegation of goods being removed clandestinely. The respondents, who are manufacturers of MS ingots, were accused of manufacturing goods to be cleared clandestinely without duty payment, leading to the seizure and subsequent redemption of the goods upon payment of a fine. The adjudication order was set aside by the Commissioner (Appeals) on the grounds that the stock verification was done on an estimation basis, and the Revenue lacked corroborative evidence to prove the alleged clandestine clearance. The Revenue, aggrieved by this decision, filed an appeal.

The crux of the argument presented by the learned AR for the Revenue is that the excess stock found in the factory was unexplained by the respondents and not recorded in statutory records, indicating unaccounted goods cleared clandestinely. The weighment of MS ingots was allegedly done correctly based on a formula used at the time. The learned AR relied on previous case law to support the Revenue's position. On the other hand, the appellant's counsel contended that the Commissioner (Appeals) correctly considered the respondent's production, which, when taken into account, showed no excess stock during the investigation. Therefore, the Commissioner's decision to uphold the dropped demand due to lack of corroborative evidence from the Revenue was justified.

The key argument put forth by the Revenue in their appeal was that the weighment conducted during the investigation was accurate, but the Commissioner (Appeals) wrongly assessed the production based on certain days, which led to an incorrect conclusion regarding excess production. The Commissioner determined the production from statutory records to be higher than what was considered during the investigation, leading to the dismissal of the Revenue's appeal. The judge agreed with the Commissioner's observations, emphasizing that the case law cited by the Revenue was not applicable to the current situation as it involved discrepancies in raw material, not the alleged clandestine clearance of manufactured goods. Ultimately, the judge found no fault in the impugned order and upheld the decision to dismiss the Revenue's appeal.