2023 (6) TMI 696 - AT - Central Excise

Clandestine manufacture and removal - copper wire - trading the goods without bringing to their factory - basis of the allegation is that the descriptions of the goods given in the respective purchase invoices do not tally with the description of the goods mentioned in the sales invoices. HELD THAT - On going through the purchase and sales invoices, it is found that though there are some apparent discrepancies/contradictions in the description of the goods; also contradictions in the statements of the Transporter and Director vis- -vis invoices, however, such contradictions cannot itself establish that the appellant had received the purchased goods in their factory, processed and converted into finished goods cleared without payment of duty. At best it can raise a suspicion about the genuineness of the transaction and be ground for further investigation. The Department has not carried out thorough investigation of the matter even though the investigation took two years after the audit objection. The intimation letters written by the appellant to the Range Superintendent from time to time informing the invoice no, vendor s name, quantity of material purchased and received in transporter s premises viz. Kamal Roadways duly acknowledged by the Inspector of the Range Office, being not contradicted by the Revenue about its genuineness, weighs in favour of the appellant. No investigation was carried out after intimation letters were received in the Range office even though these were addressed from time to time, much before the audit objection, no verification was carried out. Therefore, it is difficult to accept the allegation of the department that the quantity of goods as shown in the purchase invoices were brought into the factory, processed, converted into finished goods and removed clandestinely without payment of duty. The impugned order is set aside and the appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are whether the appellant manufactured and cleared finished goods without payment of duty, alleged discrepancies in purchase and sales invoices, lack of thorough investigation by the Department, and the genuineness of trading activity from the transporter's premises.

Manufacture and Clearance of Goods:
The appellant was alleged to have cleared goods without payment of duty, which they claimed to have purchased from two vendors. The Preventive Department's investigation report endorsed the view that the appellant manufactured and cleared copper wire without payment of duty. However, the appellant argued that they traded the goods without bringing them into their factory and had sought permission for trading activity. The Department failed to provide conclusive evidence of clandestine manufacture and clearance of goods, placing a heavy burden on them to prove the allegation.

Discrepancies in Invoices and Statements:
The Department relied on discrepancies between purchase and sales invoices to support their claim that the goods were processed in the factory before being cleared. However, the appellant contended that the purchased goods were never brought to their factory and were sold from the transporter's premises. Despite contradictions in descriptions and statements, the Tribunal found that these discrepancies did not conclusively prove clandestine manufacturing and clearance of goods.

Thorough Investigation and Genuineness of Trading Activity:
The Tribunal noted the lack of thorough investigation by the Department, especially considering the intimation letters sent by the appellant to the Range Superintendent detailing the purchase and receipt of goods at the transporter's premises. These letters were acknowledged by the Range Office Inspector but were not contradicted by the Revenue. The Tribunal found that the Department's failure to verify these letters and conduct further investigation weakened their case, leading to the appeal being allowed.

Conclusion:
The Tribunal set aside the impugned order, highlighting the lack of concrete evidence to prove clandestine manufacture and clearance of goods by the appellant. The discrepancies in invoices and statements were not sufficient to establish wrongdoing, and the Department's failure to investigate thoroughly and verify the appellant's intimation letters supported the decision to allow the appeal.

*(Pronounced in open court on 16/06/2023)*