2018 (12) TMI 928 - AT - Central Excise

Clandestine removal - the entries made in the private records when compared with the statutory records were found to be missing from the statutory records - Held that - The entire case of the Revenue is based upon these records, without there being any further corroboration as regards the receipt of the raw material or the actual manufacturer of the boilers or the actual identification of the transporters and the buyers and evidences showing receipt of the same in cash from their customers. The allegation of clandestine removal are required to be established by producing sufficient evidences or at least evidences to the extent which inspires confidence in the Revenue s allegations of clandestine removal. Undervaluation - Held that - The onus to prove is on the Revenue, who is alleging to the contrary. The said allegations were upheld on the basis of mere assumption and presumption. Further the appellants have also claimed the benefit of small scale exemption notification which the Commissioner (Appeals) has observed that though the clearances are well within the prescribed limit but the appellant have failed to give progressive value of clearances on various dates when different effective rates have to be applied for working out the duty liabilities. Having held that there is no evidence of either clandestine removal or under valuation, there are no merits in the impugned orders - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of demand of duty against M/s Urjex Boilers Pvt. Ltd.
2. Imposition of penalties on the director and accountant of the company.
3. Allegations of clandestine removal and undervaluation of products.
4. Reliance on private records and statements for the allegations.
5. Lack of corroborative evidence to support Revenue's claims.
6. Burden of proof on Revenue for allegations of clandestine removal and undervaluation.
7. Rejection of small scale exemption claim due to lack of progressive value of clearances.

Detailed Analysis:
1. The judgment addresses the confirmation of duty demand against M/s Urjex Boilers Pvt. Ltd. The Lower Authorities confirmed a duty demand of ?4,27,178 along with penalties on the company's director and accountant. The appeals arose from this impugned order.

2. The company, engaged in manufacturing boilers, was accused of clandestine activities during a visit by officers in 1999. The Revenue believed entries in private records did not match statutory records, indicating clandestine activities. Statements of the director and buyers were incriminating, leading to the initiation of proceedings for duty demand and undervaluation allegations.

3. The allegations of clandestine removal were primarily based on private records not matching statutory ones. The company claimed to be repairing boilers and producing exempted agro-based boilers. The Revenue's case lacked evidence beyond recovered private records, with no corroboration on raw material receipt, manufacturers, transporters, or buyers.

4. The judgment emphasized the necessity of sufficient evidence to establish allegations of clandestine removal. Lack of corroboration and confidence-inspiring evidence rendered the Revenue's case unsustainable. Similarly, the undervaluation allegations lacked substantiation beyond assumptions, placing the burden of proof on the Revenue.

5. The company's defense regarding bought-out spare parts was not adequately considered by the Lower Authorities, who upheld the allegations based on presumption. The rejection of the small scale exemption claim due to incomplete documentation was deemed unjustified in the absence of evidence supporting clandestine removal or undervaluation.

6. Ultimately, the impugned orders were set aside, and all three appeals were allowed in favor of the appellants, providing consequential relief. The judgment highlighted the importance of substantial evidence and proper burden of proof in establishing duty demands and allegations of undervaluation, ensuring fair treatment in excise matters.