2015 (12) TMI 1264 - AT - Central Excise

Duty demand - Clandestine removal of goods - whether 34,174 pieces of inserts used by Railways were manufactured and cleared by the respondent clandestinely without payment of duty - Held that - entire basis of allegation by the Revenue rests on the discrepancy in the production figures between the private register called as insert register and the statutory RG-1 register. Explaining the discrepancy as recorded by the ld.Commissioner(Appeals) in the impugned order, the Director of the respondent in his statement dated 23.10.2008 categorically stated that the private insert register is maintained at foundry level and it records the production at foundry level and cannot be considered as quantity manufactured and ready for dispatch as recorded in their RG-I register. There is no discrepancy in the reasoning of the ld. Commissioner(Appeals) in rejecting the allegation of clandestine removal of 34,174 pieces due to the difference in the figures in the insert Register and RG-1 Register(DSA) and consequently short payment of duty. Before this forum also the Revenue could not produce any substantial evidence to contradict the aforesaid finding of the Ld. Commissioner(Appeals). In these circumstances, I do not find merit in the appeal of the Revenue - Decided against Revenue.

Summary

Issues:
Appeal against Order-in-Appeal alleging short payment of duty based on discrepancy in production figures between private insert register and statutory RG-1 register.

Analysis:
The appeal was filed against an Order-in-Appeal alleging short payment of duty on 34,174 pieces of inserts cleared clandestinely without payment of duty. The visiting audit party identified the alleged discrepancy in production figures between the private "insert register" and the RG-1 Register, leading to the duty demand and penalty imposition under section 11AC of the Central Excise Act, 1944. The Commissioner(Appeals) set aside the order, prompting the Revenue to appeal. The Revenue contended that the difference in production figures indicated non-payment of duty on the alleged clandestine removal of inserts. The appellant argued that the private register was maintained at the foundry level and did not represent the final production figure for dispatch. The Revenue challenged the Commissioner(Appeals)'s acceptance of the appellant's explanation.

The respondent's advocate countered by stating that there was no evidence supporting the alleged clandestine removal of inserts and explained the production process and clearance of goods. The Director clarified the discrepancy in production figures and highlighted that the inserts were solely used by Indian Railways, making the clandestine removal allegation baseless. The Commissioner(Appeals) considered these arguments and set aside the allegation.

The Tribunal analyzed the case and focused on determining whether the inserts were clandestinely cleared without duty payment. The Director's statement clarified that the private insert register recorded production at the foundry level, not the final dispatch quantity as in the RG-I register. The Commissioner(Appeals) noted the absence of substantial evidence contradicting the explanation provided by the appellant. The Tribunal upheld the Commissioner(Appeals)'s decision, rejecting the Revenue's appeal due to the lack of merit in challenging the finding of no clandestine removal based on the production figures' discrepancy.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the absence of substantial evidence to refute the explanation provided regarding the production figures' discrepancy. The decision highlighted the importance of considering the nature and purpose of different registers in assessing duty payment obligations, ultimately ruling in favor of the appellant based on the Commissioner(Appeals)'s reasoned findings.