2018 (3) TMI 453 - AT - Central Excise

Clandestine removal - excess quantity of scrap and billets - Held that - The Revenue s entire case being on the basis of production slips, which stand explained by the appellant in their statements, it cannot be held to be a sufficient evidence to discharge the onus placed upon the Revenue to establish the clandestine activities - the respondents have successfully established that they are not having furnace and capital goods for production so huge quantum of the final products - The said plea of the assessee has not been rebutted by the Revenue at any point of time - appeal dismissed - decided against Revenue.

Summary

Issues involved: Appeal against order passed by Commissioner (Appeals) regarding clandestine removal of goods without payment of duty.

Analysis:
1. Background: The case involves the Revenue filing two appeals against the order passed by the Commissioner (Appeals) concerning the alleged clandestine removal of goods by a company engaged in the manufacture of Aluminum Profiles Billets and Ingots.

2. Allegations and Findings: Central Excise officers conducted checks at the company's factory and detected excess quantities of scrap and billets not entered in statutory records. Production slips indicated goods were cleared without duty payment. Statements revealed slips were prepared to secure a bank loan, not for actual production.

3. Initiation of Proceedings: Proceedings were initiated against the company, demanding duty payment of approximately &8377;30 lakhs and proposing a penalty based on the evidence gathered during the investigation.

4. Commissioner (Appeals) Decision: The Commissioner (Appeals) observed that the evidence presented by the Revenue was insufficient to prove clandestine removal. He noted discrepancies in the production capacity claimed by the company and the quantity of goods alleged to be removed clandestinely.

5. Revenue's Appeal: The Revenue appealed the Commissioner (Appeals) decision, arguing that the evidence, including production slips and statements, indicated the possibility of clandestine removal. They contended that establishing clandestine activities did not require mathematical precision but a preponderance of possibility.

6. Tribunal's Decision: The Tribunal acknowledged the difficulty for Revenue to prove cases with mathematical precision but emphasized the need for sufficient evidence based on the preponderance of possibility. The Tribunal agreed with the Commissioner (Appeals) that the evidence presented was not enough to establish clandestine activities. The company's explanation regarding production capacity and lack of necessary equipment was accepted.

7. Final Verdict: The Tribunal upheld the Commissioner (Appeals) decision, rejecting the Revenue's appeal. The lack of concrete evidence linking the company to clandestine removal, such as identification of customers or unaccounted raw materials, led to the dismissal of the appeal.

In conclusion, the Tribunal found no error in the Commissioner (Appeals) decision, emphasizing the importance of substantial evidence to prove allegations of clandestine activities in duty payment.