2016 (7) TMI 85 - AT - Central Excise

Excise duty on waste and scrap - Revenue s allegation that the scrap has arisen during the manufacture of final product and stand clandestinely removed by the appellant is primarily based upon the said statement by the authorised signatory - Held that - Having gone through the said statement, we find that the same is not categorical statement accepting dutiable waste and iron scrap cleared clandestinely under the said recovered slip. He has nowhere clearly admitted that the same is generated during the course of manufacture of the final product and stands cleared by them clandestinely. The said statement, as per the settled law cannot be made the sole basis for confirming the allegations of clandestine removal. The Revenue has not made any further investigation to find out as to when the said goods were cleared and to whom it was cleared. There is nothing on record to show that who is the ultimate buyer of the same. In the absence of such an evidence to corroborate the Revenue s stand, upholding of the same is not called for. Also the appellant has taken a stand that the dutiable waste generated in their factory stands cleared on payment of duty by way of issuing of invoices. No efforts have been made by the Revenue to find out the quantum cleared by the appellant on payment of duty and to make any suggestion or allegation that the scrap generated was excess in quantity then the duty paid by them. In such a scenario, we find no merit in the Revenue s stand. - Decided in favour of assessee

Summary

Issues: Alleged clandestine removal of waste and scrap, demand of duty, confirmation of interest, imposition of penalty

In this case, the appellant, engaged in the manufacture of LPG cylinder and other products, was accused of clandestine removal of waste generated in their factory. The Central Excise Anti Evasion Officer recovered slips indicating the clearance of scrap without payment of duty, leading to a show cause notice for duty demand amounting to ?57,950. The lower authorities confirmed the demand, imposed penalties, and upheld the order. The appellant contended that the cleared scrap was not excisable waste but packing material scrap, citing a Supreme Court decision. They argued that dutiable waste generated during production was cleared after paying duty. The Revenue relied on the statement of the appellant's representative admitting clearance of scrap without duty payment during factory cleaning. However, the tribunal found the statement insufficient to prove clandestine removal, noting the lack of evidence on when and to whom the goods were cleared. The appellant's assertion of clearing dutiable waste with duty payment was unchallenged by the Revenue, weakening their case. Consequently, the tribunal set aside the impugned orders, allowing the appeals with any consequential relief.