2018 (5) TMI 1445 - AT - Central Excise

Clandestine removal - excess stock of finished goods which was not accounted for in the books - time limitation - Held that - the commissioner had decided the case against the appellant on flimsy grounds without any evidence on record. The enquires made from the consignors revealed that they had confirmed the contents of the affidavit. In fact no records were required when the affidavits were filed. Since the issue is 22 to 23 years old, hence the records were not available as the same were destroyed; but since the bank accounts were furnished, that is enough to prove the veracity of the affidavits. Moreover the officers failed to make any enquiries from the consignees to whom the goods were sold by the consignors. The affidavits were filed long long ago at the appellate stage after the initial adjudication order. When the eight distillation columns installed in the trading unit were operating in full swing at the time of visit of the Central Excise Officers then it was not possible that there was nobody to claim the goods in question. The officers ought to have recorded the statement of the labourers to corroborate their stand, that in fact the goods were being manufactured by the appellant and not by the trading unit. The appellant was availing small scale exemption and if the clearances of the trading units and all the GRs are not included in that event they were exempt from payment of duty as their clearances will be within the prescribed limit - the entire demand is time barred - The circumstances of the case does not justify the invoking of the extended period of limitation. Appeal allowed - decided in favor of appellant.

Issues:
1. Allegations of suppression of production and clandestine clearance of excisable goods.
2. Show cause notice for recovery of Central Excise duty and confiscation of excess stock.
3. Imposition of penalties for contravention of Central Excise Act and rules.
4. Invocation of extended period of limitation for raising demands.
5. Discrepancies in seized goods and ownership claims.
6. Appeal against Order-in-Original before Tribunal.
7. Rectification applications under Section 35-C(2) of Central Excise Act, 1944.
8. Writ Petition challenging Tribunal's order and remand for fresh enquiry.
9. Fresh adjudication by Commissioner post remand.
10. Confiscation of seized goods, demand confirmation, and penalty imposition.
11. Appeal before Tribunal against Commissioner's order.
12. Arguments regarding separate premises for appellant and trading units.
13. Discrepancies in interpretation of seized goods and distillation columns.
14. Rejection of affidavits and bank accounts as evidence.
15. Time-barred demand and small scale exemption availed by appellant.

Detailed Analysis:

1. The appellant faced allegations of suppressing production and clandestinely clearing excisable goods, leading to a show cause notice for recovery of Central Excise duty and confiscation of excess stock. The notice also proposed penalties for contravention of Central Excise Act and rules, invoking the extended period of limitation for raising demands.

2. Discrepancies arose regarding seized goods and ownership claims, with contentions on separate premises for the appellant and trading units. The Commissioner's Order-in-Original post-adjudication resulted in confiscation of goods, demand confirmation, and imposition of penalties, leading to an appeal before the Tribunal.

3. The Tribunal's decision led to rectification applications under Section 35-C(2) of the Central Excise Act, 1944, followed by a Writ Petition challenging the Tribunal's order and remand for fresh enquiry. Subsequent fresh adjudication by the Commissioner resulted in confiscation of seized goods, demand confirmation, and penalty imposition.

4. Disputes arose over the interpretation of seized goods and distillation columns, with arguments regarding separate premises for the appellant and trading units. The rejection of affidavits and bank accounts as evidence raised concerns about the validity of the Commissioner's decision.

5. The appellant contended that the entire demand was time-barred, citing small scale exemption availed and discrepancies in the department's case. The Tribunal allowed the appeal, quashing the Commissioner's order and granting consequential relief to the appellant.

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