2023 (6) TMI 1241 - AT - Central Excise

Clandestine Removal - Kamdhenu brand of the iron and steel products - evasion of service tax on royalty received from various franchisees - admissible evidences - HELD THAT - In the present case the departments case doesn t have any merits as the report itself being in dispute, no reliance can be made on the same to confirm the demand on the Respondent herein - no attempt has been made by the revenue to counter the findings of the adjudicating authority and thus the view taken by the Ld. Adjudicating authority cannot be accepted. Further, the deficient quantity of 20.798 MT of MS Ingot cannot be considered as concrete Circumstantial evidence in regard to allegation of huge evasion of Central Excise duty by resorting to clandestine manufacture and sale of 35948.0799 MT of MS Bars Rods by the Respondent. It is a settled proposition that demand cannot be raised on assumptions and presumptions in cases of clandestine removal. There are no infirmities in the impunged order and hence the same is sustained - appeal dismissed.

Summary

Issues involved:
The issues involved in the judgment are evasion of excise duty, admissibility of evidence, fraudulent character of the respondent, and the sufficiency of evidence in the case.

Evasion of Excise Duty:
The appeal was filed by the department against the Order-in-Original dropping the demand of excise duty amounting to Rs. 13,35,39,859/- on the grounds of evasion. The investigation alleged that the respondent clandestinely manufactured and sold goods to M/s. Kamdhenu Ispat Limited without accounting for them. The department issued a Show Cause Notice (SCN) based on this investigation. However, the Adjudicating authority dropped the entire demand, exonerating the respondent and its directors from duty, interest, and penalty. The department contended that the order should be reversed, but the respondent argued that the demand was based on assumptions and disputed investigations. The respondent relied on judicial pronouncements to support their argument that clandestine removal cannot be proved based on assumptions.

Admissibility of Evidence:
The department argued that the data retrieved by the Directorate General of Excise Intelligence (DGCEI) should be admissible as evidence against the respondent. However, the report of the GEQD was disputed, with allegations of manipulation. The Tribunal had previously remarked on the doubtful validity of the retrieved data, questioning its reliability. The Adjudicating authority discussed the conditions under Section 36B of the Central Excise Act, stating that the computer printouts produced were not admissible due to lack of lawful control over the computers by the respondent. The authority also referred to past cases where demands were dropped based on assumptions, highlighting the need for concrete evidence in such cases.

Sufficiency of Evidence:
The Tribunal found that the report of the GEQD was in dispute, and no reliance could be placed on it to confirm the demand against the respondent. The Adjudicating authority's findings on the admissibility of the report under Section 36B were upheld, noting that no attempt was made by the revenue to counter these findings. The deficient quantity of MS Ingot found during physical verification was deemed insufficient to prove the allegation of huge evasion of excise duty through clandestine manufacture and sale. The Tribunal emphasized that demands cannot be raised on assumptions and presumptions in cases of clandestine removal, ultimately dismissing the appeal and upholding the Adjudicating authority's decision.