2018 (6) TMI 476 - AT - Central Excise

Clandestine removal - demand worked out on the basis of electricity consumption - Held that - This issue has been consistently held in various judgments of Hon ble Supreme Court Hon ble High Court and this Tribunal that merely on electricity consumption it cannot be held that the assessee has produced the extra production and cleared clandestinely in absence of any other corroborative evidence. In the present case also except the electricity consumption that too only on the basis of Dr. Batra s report there is no evidence of receipt of raw material production clandestine removal and consideration towards the sale of clandestine removal of goods therefore demand of duty only on basis of electricity consumption cannot be confirmed. Demand do not sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
Demand of excise duty on short found goods in factory premises and demand of duty on alleged quantity of production based on electricity consumption.

Analysis:
The judgment pertains to a case where a demand of excise duty was confirmed on short found goods in the factory premises, along with a demand based on alleged quantity of production calculated from electricity consumption. The appellant challenged the Order-in-Original, which upheld a portion of the demand related to shortages found in the physical stock but dropped the demand linked to electricity consumption. The Revenue appealed against the dropped demand.

The Revenue argued that the demand based on electricity consumption should not have been dropped as there were other evidences supporting the variation in consumption. The learned Supdt. relied on several judgments to support this argument. However, since no one appeared on behalf of the respondent, the Tribunal carefully considered the submissions made by the Revenue.

Regarding the demand related to electricity consumption, the Tribunal noted that mere variation in electricity consumption does not conclusively prove extra production and clandestine removal without additional corroborative evidence. The Tribunal cited various judgments, including those from the Supreme Court and High Courts, to support this position. In the absence of evidence regarding raw material receipt, production, or clandestine removal, the demand based solely on electricity consumption was deemed unsustainable.

Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals) to drop the demand linked to electricity consumption. Citing precedents, the Tribunal concluded that demanding duty solely based on electricity consumption was not justifiable. Consequently, the Revenue's appeal was dismissed, and the impugned order was upheld.

In conclusion, the judgment clarifies the evidentiary requirements for establishing duty demands based on electricity consumption and emphasizes the necessity of corroborative evidence to support such claims.