2018 (11) TMI 454 - AT - Central Excise

Clandestine removal - demand based on comparison of figures as reflected by the appellant in their ER-I return and their sales register - Held that - The appellant s explanation is that the sales register also shows the clearances of inputs as such and all the entries in the sales register do not relates to clearance of their final product and draws our attention to various documentary evidences in support of their plea - such documentary evidences cannot be examined and verified at the Tribunal level and inasmuch as the same relates to factual position are required to be examined by the Original adjudicating authority, for which purpose matter is remanded. Demand to the tune of ₹ 2,52,362/- is based upon the fact that a quantity of 62.600 M.T. of MS Ingots which stands recorded in RG-I Register has been removed by the appellant without issuance of any invoice - Held that - Appellant submits that all the said facts were reflected in their RG I Register and they have documentary evidences to prove recycling of the Ingots. Inasmuch as, the said fact also relates to examination and verification of the factual position, the said issue is remanded to the adjudicating authority. Denial of CENVAT Credit on the DG Set, which was not found to be present in the assessees factory - Held that - Though the Lower Authorities have accepted the fact that the said DG Set has subsequently paid the duty but the issue relates to imposition of penalty inasmuch as it is the Revenues case that duty was paid on DG Set only after being pointed out by the Audit team. Inasmuch as, we have remanded the earlier two issues, the adjudicating authority would also deal with the said aspect. Appeal allowed by way of remand.

Summary

Issues:
1. Allegation of clandestine removal based on comparison of figures in ER-I return and sales register.
2. Removal of MS Ingots without issuance of invoice.
3. Denial of credit on DG Set believed to have been sold.
4. Dropping of demand due to goods sent for re-melting being defective.

Analysis:

Issue 1: Allegation of Clandestine Removal
The appellant, engaged in manufacturing MS Ingots and colour coated sheets, faced a demand of duty amounting to ?11,91,806 based on alleged clandestine removal. The lower authorities confirmed the demand by comparing figures in the ER-I return and sales register. The appellant argued that the sales register also included clearances of inputs and not just final products. However, the Tribunal deemed the documentary evidence supporting this claim as needing examination by the original adjudicating authority, leading to a remand for further scrutiny.

Issue 2: Removal of MS Ingots without Invoice
A part of the demand, ?2,52,362, stemmed from the removal of 62.600 M.T. of MS Ingots without issuing an invoice. The appellant contended that 32.600 M.T. had invoices, while the remaining 30 M.Ts. were recycled due to poor quality, supported by entries in the RG-I Register and documentary evidence. This issue, involving factual verification, was also remanded to the adjudicating authority for detailed examination.

Issue 3: Denial of Credit on DG Set
The denial of ?1,05,283 credit on a DG Set, not found in the factory and believed to be sold, was explained by the appellant as sent for repair during an officer's visit and cleared upon return after duty payment. The contention revolved around the penalty imposition due to the timing of duty payment, which the adjudicating authority was tasked to address alongside the other remanded issues.

Issue 4: Dropping of Demand for Defective Goods
The Revenue appealed against dropping a demand of ?39,58,017, arguing no undervaluation as the goods were sent to another unit for re-melting due to being defective. The Commissioner (Appeals) found no motive for undervaluation as the duty paid was credited to the recipient unit. The appellant claimed evidence of the goods being defective, leading to a remand of the Revenue's appeal for further substantiation.

In conclusion, the impugned order was set aside, and both appeals were allowed by way of remand, emphasizing that no opinion on the merits was expressed. The parties were granted the opportunity to contest all issues before the adjudicating authority with the production of necessary evidence.