2018 (1) TMI 477 - AT - Central Excise

Clandestine removal - variation with the actual sale - excess/shortage of finished goods and excess of raw material was found - Held that - No evidence has been brought on record to ascertain the fact that how the goods have been produced by way of consumption of electricity, number of work hours, production capacity of the machines and no efforts has been made to ascertain the fact that how the goods were transported and where the goods were sold. Also, there are certain calculation errors while drafting the show cause notice, but no heed has been given by the authorities below to consider the same. In that circumstances, the impugned orders have no merit, hence, the same are set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Appeal against demand confirmed for clandestine removal of goods.
- Allegations based on assumptions and presumptions.
- Lack of tangible evidence for clandestine removal.
- Consideration of burning losses and wastages in the plastic industry.
- Calculation errors in the show cause notice.
- Demands based on theoretical formula without actual verification.

Analysis:
1. The appellants appealed against confirmed demands for clandestine removal of goods, arguing that the charges were based on assumptions and presumptions without tangible evidence. The authorities alleged that the appellants manufactured goods clandestinely and cleared them without paying duty, but failed to provide concrete proof regarding production processes, transportation, and sales. The Tribunal referred to a previous case to establish criteria for proving clandestine activities, emphasizing the need for tangible evidence such as excess raw materials, unaccounted finished goods, sale transactions, and transportation records.

2. The Tribunal noted that the authorities did not meet the criteria for alleging clandestine removal against the appellants. Additionally, the appellants' counsel highlighted the presence of burning losses and wastages in the plastic industry, factors not considered by the authorities. Calculation errors in the show cause notice were also pointed out, indicating a lack of attention to detail by the authorities. The demands were found to be based on theoretical formulas without considering practical aspects, rendering them unsustainable.

3. Based on the analysis, the Tribunal concluded that the impugned orders and show cause notice lacked merit and set them aside. The appeals were allowed with consequential relief, emphasizing the importance of concrete evidence and proper consideration of industry-specific factors in cases of alleged clandestine activities.