2019 (3) TMI 858 - AT - Central Excise

Clandestine manufacture and removal - demand of the duty is only on the allegations as confirmed by the lower authorities on the quantum of goods certified by the quality control certificate and information provided by State Government authorities - Held that - The verification of the data indicated that clearances which were made by the appellant to State Government for laying the water pipes in the rural areas were three counts i) receipt of orders ii) quality of supply of the goods iii) post quality control removal. The Revenue Authorities have mentioned the clearances made by the appellant and the quality control reports of the State Government as regards particular evidence specific quality of the goods when correlated with the appellant s record, are not able to show from the records maintained by him as to how and when the pipes were cleared to State Government Authorities and was on payment of appropriate Central Excise duty. It is also to be noted that when confronted with the evidence available with the State Government quality control analysis of the consignment of the pipes, the managing director of the appellant s company has admitted in his statement that there is practice of clandestine removal of goods - the First Appellate Authority has considered all these aspects and confirmed the demands on this ground which is seemed correct - appeal dismissed.

Summary

Issues:
Allegations of clandestine manufacture and removal of goods, evidence provided by State Government authorities, quality control reports, confirmation of demands by lower authorities, imposition of penalty.

Analysis:
The appeal involved allegations of clandestine manufacture and removal of goods by the appellants, who were manufacturers of HDPE pipes. The officers of anti-evasion discovered documents indicating clandestine removal after the State Government authorities reported discrepancies in the quantities supplied. A show cause notice was issued for recovery of duty, interest, and penalty for the period 2011-2012 to 2015-2016. The Adjudicating Authority confirmed the demands and imposed penalties after due process. The First Appellate Authority upheld the order but reduced the demand slightly based on the appellant's contentions.

The main appellant's consultant argued that the demand was solely based on the information provided by State Government authorities and lacked concrete evidence. He questioned the evidential value of the information and the lack of quantification of unaccounted goods from the raw material stage. The Departmental Representative, however, emphasized the managing director's statement admitting to clandestine removal, supported by the quality control reports from the State Government.

Upon review, the judge found that the allegations centered on clandestine manufacture and removal of goods. The verification revealed three key aspects: receipt of orders, quality of supply, and post-quality control removal. The State Government's quality control reports did not align with the appellant's records regarding the clearance of pipes to the Government with appropriate duty payment. The managing director's admission of clandestine removal further corroborated the evidence. The judge agreed with the First Appellate Authority's decision to confirm the demands based on these grounds.

Ultimately, the judge upheld the impugned order, stating that there was no reason to interfere. The appeal was rejected, and the decision was pronounced in open court on 15/03/2019.