2016 (12) TMI 432 - AT - Central Excise

Clandestine removal - Demand - Period of limitation - Held that - under the facts and circumstances in view of the standard practice followed by the appellant of filling slightly excess quantity to avoid any commercial disputes with their buyers, no case of clandestine removal is made out. We also hold that the evidence collected by the learned Commissioner behind the back of the appellant cannot be relied upon and the same have got no evidential value in absence of giving proper opportunity to object or explain the same - Moreover, the said evidence collected from other companies/manufacturers in the same line of business is also not reliable in view of the standard laid down by the BIS as noted herein above, which provides for variation of actual net weight of carbon black - the appellant have not received any additional consideration for the extra quantity packed - Appeal allowed - decided in favor of the assessee.

Summary

Issues Involved:
1. Evidence of removal of carbon black without invoices.
2. Receipt of additional consideration for overfilled carbon black.
3. Demand of Central Excise Duty on overfilled carbon black when duty is payable on ad valorem basis.

Detailed Analysis:

1. Evidence of Removal of Carbon Black Without Invoices:
The Tribunal was directed by the Hon’ble High Court to examine whether there was any evidence of removal of carbon black by the appellants without invoices clandestinely. The Tribunal found that the appellant's practice of overfilling bags slightly to avoid customer disputes was a standard practice and not indicative of clandestine removal. The evidence collected by the Commissioner from other companies was deemed unreliable as it was collected without giving the appellant an opportunity to rebut. The Tribunal concluded that no case of clandestine removal was made out.

2. Receipt of Additional Consideration for Overfilled Carbon Black:
The Tribunal was instructed to determine if the appellants had received any additional consideration for the overfilled quantity of carbon black. It was established that the appellants did not receive any extra payment for the slightly excess quantity packed. This was supported by the investigation with one of the purchasers, Modi Tyres, who confirmed no excess payment was made. The Tribunal referenced previous rulings, including Rackitt & Colman of India Ltd. and Manisha Pharmo Plast Ltd., which supported the view that if the price received remains the same despite overfilling, it does not have revenue implications.

3. Demand of Central Excise Duty on Overfilled Carbon Black:
The Tribunal examined whether Central Excise Duty could be demanded on the slightly overfilled quantity of carbon black when the duty was payable on an ad valorem basis. The Tribunal noted that the duty on carbon black is linked to its value, and since no additional consideration was received for the overfilled quantity, no extra duty was payable. The Tribunal also referred to the BIS standards, which allowed for minor variations in weight, further supporting the appellant's practice. The Tribunal held that the issue was covered by precedent decisions and no excise duty was payable on the negligible excess quantity packed.

Conclusion:
The Tribunal allowed the appeals, set aside the impugned order, and ruled that no excise duty was payable on the overfilled quantity of carbon black. The Tribunal also held that the extended period of limitation was not invocable and directed the refund of pre-deposits with interest within 45 days. The judgment was pronounced on 14.09.2016.