2018 (4) TMI 291 - AT - Central Excise

Clandestine removal - clearance of goods under the fake parallel invoices - customers found non-existent and addresses of customers found to be fake - Held that - The said factors discharged the initial onus placed upon the Revenue and it is now for the appellant to establish that the goods were not removed under the cover of said invoices. No documentary evidence has been produced by them to show the cancellation of the purchase orders by the customers. In fact their authorised representative has admitted such clearances along with the admission of receipt of goods by the buyers - demand upheld. Demand of duty on the basis of variation and quantity in the invoice and the packing list - Held that - the demand on the said ground stands confirmed only on the basis of difference in the invoice weight and the packing list weight, without there being any other evidence of clandestine manufacture of excess goods and their clearances - Though, such factory may raise doubt against the appellant but cannot take place of evidence so as to confirm the demand - demand set aside. Demand of ₹ 95,345/- based on alleged excess consumption of aluminium scrap which according to Revenue was transferred from their daily stock account i.e. RG-1 register but not entered in their Form-IV register - Held that - This fact, by itself, does not lead to the inevitable conclusion of clandestine manufacture and clearance of their final product, in the absence of any other evidence on records - demand set aside. Demand of ₹ 79,392/- based on ageing report alleging the difference between the quantity in ageing report and daily stock account for two days i.e. 22.1.2013 and 29.3.2013 - Held that - the ageing report is not a statutory document and no evidence of clandestine removal of such quantity brought on record by the department, therefore the demand of ₹ 79,392/- is liable to be set aside. Demand of ₹ 1,20,784/- stands confirmed on the basis of Ledger Purchase-B recovered from the premises of the traders being third party records - Held that - the demand cannot be sustained on the sole basis of the entries made therein - The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - demand set aside. The demand of ₹ 17,994/- stands confirmed on the basis of the shortages detected by the officers during the course of their visit in the appellant s factory - Held that - Inasmuch as there is no other evidence, such shortages by itself cannot be held to be relatable to the clandestinely removed goods - demand set aside. Penalty - Held that - the duty of ₹ 2,08,356/- is confirmed against M/s Vimsar Products Pvt. Ltd. and the balance demand is set aside. As regards, penalty the same is upheld to the extent of the demand confirmed. Penalty on other two appellant - Held that - no separate role stands attributed to the appellants and no positive evidence stands adduced by the Revenue to show their complexity in the matter - penalty on them set aside. Appeal allowed in part.

Issues:
1. Confirmation of demand based on alleged irregularities in invoices
2. Confirmation of demand based on excess quantity in invoices
3. Alleged excess consumption of aluminium scrap
4. Discrepancy in ageing report and daily stock account
5. Demand based on Ledger Purchase-B entries
6. Shortage of finished goods and penalty imposition

Confirmation of Demand based on Alleged Irregularities in Invoices:
The appellate authority confirmed a demand of ?2,08,356 based on the recovery of parallel invoices showing removal of goods to buyers. While two buyers confirmed receipt, the third was found non-existent. The appellant's representative admitted clearance under fake invoices. The Revenue found the invoices, and the burden shifted to the appellant to prove non-removal, which they failed to do. Thus, the demand was upheld.

Confirmation of Demand based on Excess Quantity in Invoices:
A demand of ?1,25,702 was confirmed due to variations in weight between invoices and packing lists. The appellant argued the packing lists were third-party documents and lacked sufficient evidence. The demand was set aside as there was no proof of clandestine manufacture or clearance of excess goods beyond the weight discrepancies.

Alleged Excess Consumption of Aluminium Scrap:
A demand of ?95,345 was made for alleged excess consumption of scrap not recorded in the Form-IV register. The lack of additional evidence to prove clandestine activities led to setting aside this demand.

Discrepancy in Ageing Report and Daily Stock Account:
A demand of ?79,392 was based on differences in the quantity between the ageing report and daily stock account. The appellant explained the purpose of the report for quality maintenance and lack of evidence of clandestine activities. The demand was set aside due to insufficient proof.

Demand based on Ledger Purchase-B Entries:
A demand of ?1,20,784 was confirmed based on Ledger Purchase-B entries from traders' premises. Without corroborative evidence, solely relying on third-party records was deemed insufficient to prove clandestine activities, following established legal precedents.

Shortage of Finished Goods and Penalty Imposition:
A demand of ?17,994 was confirmed based on shortages found during a factory visit. The absence of additional evidence linking shortages to clandestine removal led to setting aside this demand. The penalty was upheld only to the extent of the confirmed demand against M/s Vimsar Products Pvt. Ltd., while penalties on other appellants were set aside due to lack of evidence implicating them.

In conclusion, the judgment confirmed certain demands based on evidence provided and legal principles, while setting aside others due to insufficient proof of clandestine activities or lack of corroborative evidence. Penalties were imposed accordingly, considering the roles and evidence attributed to each party involved.

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