2017 (11) TMI 138 - AT - Central Excise

Clandestine removal - It is alleged that the consumption of the input material is abnormally low - Held that - the charge against the respondent is that the clandestine removal of the goods on the basis of abnormal loss of the inputs used in the manufacture of the final products. It is seen from the records that the Revenue had not conducted any investigation and/or inquiry to ascertain the reason for low consumption of the input materials. The respondent had given explanation that the consumption of the input material is depending upon the various factors. The Adjudicating Authority had not examined the issues in detail - appeal dismissed - decided against Revenue.

Summary

Issues:
- Demand of duty on manufacturing of Un-machined Castings of Iron
- Abnormal low consumption of input material
- Appeal against the Adjudication Order
- Lack of investigation by Revenue
- Detailed findings by Commissioner (Appeals)

Analysis:

1. The case involved a demand of duty on the manufacturing of Un-machined Castings of Iron due to alleged abnormal low consumption of input material, leading to a Show Cause Notice being issued. The Adjudicating Authority confirmed the demand, but the Commissioner (Appeals) set it aside, prompting the Revenue to file an appeal.

2. The Revenue contended that the respondent failed to provide documentary evidence supporting the alleged loss over four years and did not offer expert opinions or technical reasons for the abnormal yield of finished goods.

3. The respondent argued that the figures in the Show Cause Notice were arbitrary, with gaps, and highlighted the absence of opening and closing balances in the calculations. They emphasized that the Department relied on assumptions and presumptions, presenting a reply to the Show Cause Notice.

4. The Commissioner (Appeals) noted that the goods were precision castings for specific customers, suggesting a higher value compared to ordinary castings. The department's failure to examine purchase orders and market verification was criticized. The appellant's pricing strategy and duty payment breakdown were cited to challenge the basis of the demand.

5. The Tribunal found that the charge of clandestine removal was based on abnormal loss of inputs, but the Revenue did not conduct any investigation to determine the reason for low material consumption. The Adjudicating Authority did not delve into the issues, while the Commissioner (Appeals) provided detailed findings, leading to the dismissal of the Revenue's appeal.

6. Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals) decision based on the detailed findings and lack of investigation by the Revenue.