2018 (1) TMI 716 - AT - Central Excise

CENVAT credit of CVD paid on imported scrap - Revenue held a view that the appellants should have reversed the credit availed on imported scrap, which were cleared as such, during the year 2011-12 - Held that - There is no verification or evidence to the effect as to how the appellant could have manufactured the Aluminium ingots other than by the accounted raw materials in their books. It is also not clear as to how a 7% waste generation is found to be not acceptable by the Original Authority. The Original Authority even questioned the fact that the appellant used all the three sources of Aluminium scrap. In case of such apprehension, it is for the Revenue to verify the facts and to establish that the imported scrap were in fact diverted. The Revenue has not even verified the type of furnace used by the appellant. It would appear that the whole burden of establishing non-clearance of imported Aluminium scrap as such was put on the appellant - such proposition is against the basic principle of law. Demand on the basis of the entry of burning loss - Held that - the Revenue did not adduce any evidence for manufacture on that date, which was cleared unaccounted clandestinely. No duty demand can be confirmed by inference. The present case is only based on the inferences and un-substantiated allegation and as such, the impugned order cannot be sustained - appeal allowed.

Summary

Issues:
1. Demand of duty on clearance of imported scrap
2. Demand of duty on clearance of Aluminum Ingots and miscellaneous scrap without due accounting

Analysis:
1. The main issue in this case revolves around the demand of duty amounting to &8377; 58,02,933/- on the clearance of imported scrap by the appellant. The Revenue alleged that the appellant cleared the imported scrap as miscellaneous scrap without utilizing it in the manufacture of Aluminum ingots. However, the appellant argued that they indeed used the imported scrap in their manufacturing process and provided detailed breakdown of the quantity of scrap used. The tribunal noted that the Revenue failed to provide concrete evidence to support their claim of diversion of imported scrap. The tribunal found the Revenue's conclusions to be based on inference and presumption, lacking substantial evidence. The tribunal highlighted that the burden of proof lies on the Revenue to establish any diversion of imported scrap, which was not satisfactorily done in this case. Therefore, the demand of duty on the clearance of imported scrap was set aside, and the appeal was allowed.

2. The second issue pertains to a demand of &8377; 2,77,189/- on the clearance of Aluminum Ingots and miscellaneous scrap without due accounting. The Revenue based this demand on an entry in the RG-I Register, indicating a burning loss, which they interpreted as unaccounted production and clearance of goods. However, the appellant contended that the entry was made in error and there was no actual production on that date. The tribunal noted that the Revenue failed to provide any substantial evidence to prove the clandestine production and clearance of goods. Without concrete evidence, the tribunal held that no duty demand can be confirmed by mere inference. Therefore, the demand of duty on the clearance of Aluminum Ingots and miscellaneous scrap without due accounting was also set aside, and the appeals were allowed.

In conclusion, the tribunal found that the impugned order was solely based on inferences and un-substantiated allegations by the Revenue. As a result, the tribunal set aside the impugned order and allowed the appeals in favor of the appellant.