2017 (11) TMI 1330 - AT - Central Excise

Clandestine removal - excesses and shortage of stock - Whether the First Appellate Authority was correct in confirming the demands raised by the show cause notice along with interest and consequent penalties or otherwise? - Whether the First Appellate Authority was correct in dropping the demands raised by the Lower Authority or otherwise? Held that - the appellant had no explanation to offer for the excess goods found as also shortage of the goods. The challenge put up by the said M/S. NIBI Steel Ltd., in the grounds of appeals is not controverting the detailed reasoning recorded by the First Appellate Authority - the appeal filed by the M/S. NIBI Steel Ltd. is devoid of merits and needs to the rejected. The evidences which revenue wants to rely upon are considered in detail and on an correct appreciation, a conclusion has been arrived. I concur with the said findings - appeal filed by Revenue also dismissed. Penalty on M/S. NIBI Steels - Held that - It is settled law that once there are findings of clandestine removal and confirmation of the demand of the duty is on said findings, equivalent amount of penalty needs to be imposed under section 11 AC of the Central Excise Act 1944 - penalty imposed on M/S NIBI Steel Ltd. is enhanced to ₹ 2,28,451/- from ₹ 50,000/-. Appeals disposed off.

Summary

Issues:
1. Confirmation of demands raised by the show cause notice along with interest and penalties for M/S NIBI Steel Ltd.
2. Dropping of demands raised by the Lower Authority in the appeal filed by revenue.

Analysis:

Issue 1: Confirmation of demands for M/S NIBI Steel Ltd.
The issue at hand is whether the First Appellate Authority was correct in confirming the demands raised by the show cause notice along with interest and penalties for M/S NIBI Steel Ltd. The Departmental Representative argued that there was corroboration of clandestine removals based on statements of Directors and recovered loose sheets. The appellant contended that there were no conclusive evidences supporting clandestine clearances and that the weighment method was estimated, challenging the adjudication order's legality. The Tribunal found that the appellant failed to offer explanations for excess goods and shortages, and the challenge did not counter the detailed reasoning of the First Appellate Authority. Consequently, the appeal by M/S NIBI Steel Ltd. was deemed meritless and rejected.

Issue 2: Dropping of demands by the Lower Authority in the appeal filed by revenue
The appeal filed by revenue questioned the dropping of demands and penalties by the First Appellate Authority. The Tribunal noted detailed reasoning by the Authority, highlighting deficiencies in the evidence provided to support the demands. It was observed that insufficient details and lack of corroboration regarding weighment of goods and invoices raised doubts on the clandestine removal allegations. The Tribunal emphasized the necessity for affirmative and cogent evidence to confirm demands, referencing previous decisions. Ultimately, the Tribunal found the appeals by revenue devoid of merits due to insufficient evidence and lack of investigation to substantiate the claims. However, the Tribunal upheld the imposition of an equivalent penalty on confirmed demands of duty for M/S NIBI Steels, enhancing the penalty amount in accordance with the Central Excise Act.

In conclusion, the Tribunal disposed of all three appeals, affirming the rejection of M/S NIBI Steel Ltd.'s appeal and finding the revenue's appeals lacking merit except for the enhancement of penalties on M/S NIBI Steel Ltd. for clandestine removal of goods.