2017 (5) TMI 1188 - AT - Central Excise

Clandestine removal - the plea of production capacity is less than the quantity alleged to have been removed has been taken for the first time through the Chartered Engineer s Certificate produced during the adjudication proceeding - Held that - since the unit of the Respondent is not capable of manufacturing the quantity alleged to have been removed clandestinely, in view of the Chartered Engineer s Certificate, therefore, the allegation of clandestine manufacture and clearance made on the basis of entries made in various private records remain uncorroborated and hence, cannot be relied upon - we remand the matter to the adjudicating authority with the direction to get the Chartered Engineer s Certificate verified and if necessary could independently - appeal allowed by way of remand.

Summary

Issues:
1. Acceptance of Chartered Engineer's Certificate during adjudication proceedings.
2. Allegation of clandestine manufacture and clearance based on production capacity.
3. Role of Chartered Engineer's Certificate in the decision-making process.
4. Remand of the matter for further verification and assessment.

Detailed Analysis:
1. The appeal filed by Revenue challenged the Order-in-Original passed by the Commissioner of Central Excise & Customs, Rajkot. The Revenue argued that the Chartered Engineer's Certificate submitted by the Respondent during adjudication was unilaterally accepted by the adjudicating authority without proper verification. The Revenue contended that the production capacity plea was raised for the first time during adjudication, not in the investigation or statements. The Revenue requested a remand for a proper inquiry into the correctness of the certificate, citing a Supreme Court case supporting the need for a fair chance to rebut evidence.

2. The Respondent's advocate argued that besides the Chartered Engineer's Certificate, the Commissioner dropped the proceedings after analyzing various evidences, including statements and records. The Commissioner found that the demand notice could not be sustained based on the evidence collected.

3. The Tribunal carefully considered both sides' submissions. The Revenue contended that the production capacity plea was raised late through the Chartered Engineer's Certificate, impacting the findings. The Commissioner's observations highlighted discrepancies in the alleged production quantity compared to the factory's capacity certified by the Chartered Engineer. The Commissioner concluded that the entries in private records and the quantity of alleged clandestine removal were not supported by the factory's capacity, leading to the failure of the charge.

4. The Tribunal noted that the Commissioner's decision was influenced by the factory's capacity as certified by the Chartered Engineer. In the interest of fairness, the Tribunal remanded the matter for verification of the certificate and independent assessment of the machinery's production capacity. The Tribunal directed the adjudicating authority to complete the proceeding within three months, emphasizing cooperation from the Respondent. The Revenue's appeal was allowed for remand, and the Respondent's Cross-Objection was disposed of accordingly. The decision aligned with a recent Supreme Court case emphasizing the importance of allowing the Revenue to rebut the evidence presented by the assessee.