2018 (7) TMI 166 - AT - Central Excise

Clandestine removal - shortage of raw material - no evidences could be produced - Held that - From the cross examination, it is very clear that the Central Excise officers did not conducted any physical weighment of raw materials. Therefore, it is not establish that officers found shortage of 8855.398 MT of raw materials - demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Appeals arising from common impugned Order-in-Original regarding alleged clandestine removal of raw materials without payment of Central Excise duty, cross examination of departmental officers and panch witnesses, imposition of penalties under Rule 26 of Cenvat Credit Rules, 2002.

Analysis:
The case involved three appeals arising from a common impugned Order-in-Original regarding the alleged clandestine removal of raw materials without payment of Central Excise duty. The appellants, engaged in the manufacture of automobile components, were visited by Central Excise officers who found shortages of raw materials during a verification. The officers recorded statements and issued a show cause notice alleging the removal of raw materials without payment of duty. The appellants requested cross examination of departmental officers and panch witnesses, which was conducted later. The Original Authority confirmed the demand and imposed penalties on the appellants. The appellants challenged this order before the Tribunal.

During the hearing, the appellants' counsel argued that the panchnama's content about physical weighment and shortage was not supported by the cross examination of panch witnesses. They contended that the revenue needed positive and conclusive evidence to prove clandestine removal, including details of sale, transportation, consideration received, and utilization without proper accountal. The counsel cited various legal decisions to support their contention.

The revenue's representative supported the impugned Order-in-Original. After considering the arguments and perusing the records, the Tribunal found that the Central Excise officers did not conduct any physical weighment of raw materials, thus failing to establish the alleged shortage. Consequently, the Tribunal held the impugned Order-in-Original to be unsustainable and allowed all the appeals filed by the appellants. The judgment was pronounced on 29/06/2018 by the Tribunal.