2017 (1) TMI 362 - AT - Central Excise

Clandestine removal - mis-match in the goods as per records and physical stock - demand of duty, interest and penalty - the case has been booked against the appellants on the basis of kachcha parchies recovered during the investigation and various statements recorded during the course of investigation - Held that - several points have been raised by assessee, which have not been examined by adjudicating authority, which requires re-examination. Total quantity of 473403.8 kgs of RPP dana received from M/s.A.V.Bobbins (P) Ltd., adjudicating authority has not considered the fact that out of total quantity, a quantity of 199468 kgs RPP dana was covered by invoices for which the invoices are placed on record, the same is required to be considered by the adjudicating authority and the demand is required to be reduced to that extent. The Revenue has failed to examine the mode of transportation, therefore, in the absence of corroborative evidence showing receipt of goods against these katcha parchies by the appellant, the demand on this count, is not sustainable. The appellant has taken the plea that to manufacture plastic spools out of RPP dana and scrap, there is burning loss. The quantum of burning loss is required to be considered by the adjudicating authority as it is also fact that if any goods manufactured from the scrap or reprocessed plastic dana, there is burning loss, this fact is required to be considered while considering the quantity manufactured by the appellant. Matter remanded for re-examination - appeal disposed off by way of remand.

Issues:
1. Clandestine removal of goods without payment of duty and mis-utilization of credit on inputs.
2. Discrepancy in stock of goods, excess and shortage of finished goods.
3. Duty demand on goods allegedly manufactured from unaccounted raw material.
4. Excessive redemption fine imposed.
5. Clearance of goods without payment of duty based on recovered documents.
6. Burning/processing losses during manufacturing.
7. Proper consideration of documentary evidence.
8. Allegation of clandestine removal based on recovered documents and statements.
9. Consideration of invoices for received raw material.
10. Benefit of job work challan and kachcha parchies not considered.
11. Lack of corroborative evidence for goods received against kachcha parchies.
12. Examination of burning loss in manufacturing process.
13. Proper adjustment of excess and shortage of finished goods in duty computation.
14. Confiscation of excess goods and imposition of redemption fine.
15. Examination of the role of co-appellants for penalty imposition.

Analysis:
The judgment involves appeals against an order related to clandestine removal of goods without duty payment and mis-utilization of credit on inputs. The appellant, engaged in manufacturing plastic spools, faced allegations of clearing goods clandestinely, leading to duty demand, interest, and penalties. The appellant argued discrepancies in stock were due to improper record maintenance, citing similar finished goods entered in wrong heads. The appellant contended excess goods were not for confiscation, emphasizing lack of evidence for clandestine intent. The argument referenced specific case laws to support the defense.

The appellant further argued against duty demand on goods allegedly manufactured from unaccounted raw material, emphasizing the need for proper consideration of documentary evidence and burning losses during manufacturing. The appellant highlighted the submission of sales tax returns and the necessity of considering burning losses in duty calculation. Additionally, the appellant raised concerns regarding the excessive redemption fine imposed, emphasizing the lack of excess finished goods and attributing discrepancies to record-keeping errors.

On the other hand, the respondent reiterated findings supporting the charge of clandestine removal based on recovered documents and statements. The judgment, after considering submissions, noted the case was built on recovered kachcha parchies and statements. The Tribunal found discrepancies in the consideration of received raw material invoices and job work challans, directing the adjudicating authority to reevaluate the demands in light of these oversights. The judgment emphasized the need for corroborative evidence and proper examination of burning losses and stock discrepancies.

Ultimately, the Tribunal set aside the impugned order and remanded the matter for fresh adjudication. The decision highlighted the necessity of examining all aspects, adjusting excess and shortage of goods in duty computation, and reassessing the role of co-appellants for potential penalty imposition. The judgment concluded by disposing of the appeals through remand, emphasizing the need for a comprehensive reevaluation of the case by the adjudicating authority.

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