2018 (6) TMI 1483 - AT - Central Excise

Clandestine removal - demand based on consumption of electricity - absence of corroborative evidences - Held that - There is no evidence produced by the Revenue to show that the appellants were indulging in clandestine activities. No efforts have been made by the Revenue to show that the entries in the records of M/s. Manu Steels related to actual transportation and supply of raw material to the appellant - demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty, interest, and penalty; imposition of penalty on Directors/authorized signatories; allegations of clandestine removal based on electricity consumption; reliance on Supreme Court's decision in R.A. Castings (P) Ltd.; transactions in consignment agent's records; lack of evidence of clandestine activities; Tribunal's decisions in similar circumstances.

Analysis:
The judgment addresses the challenge to the confirmation of demand of duty, interest, and penalty, along with the imposition of penalty on Directors/authorized signatories. Initially, the demand was issued based on allegations of clandestine removal, primarily linked to electricity consumption. However, the Commissioner dropped a significant portion of the demand by relying on the Hon'ble Supreme Court's decision in R.A. Castings (P) Ltd. while upholding some part of the demand.

The demands in question were rooted in the entries found in the records of a consignment agent, M/s Monu Steels, indicating that the appellants sold goods without paying duty. Despite the appellant's denial of the entries in the consignment agent's records from the outset, the Revenue failed to produce any other evidence demonstrating the appellants' engagement in clandestine activities. Notably, there were no efforts made to establish a connection between the entries in M/s. Manu Steels' records and the actual transportation and supply of raw materials to the appellant.

In light of the lack of substantial evidence and in alignment with previous Tribunal decisions in similar circumstances, such as M/s. Shree Consultants Pvt. Ltd. and others, the judgment deemed the allegations and findings of clandestine activity as unsustainable. Consequently, the impugned order was set aside, and all appeals were allowed with consequential relief to the appellants. The judgment highlights the importance of substantial evidence in establishing allegations of clandestine activities and underscores the need for a robust legal basis for imposing duties, interest, and penalties in such cases.