2023 (8) TMI 658 - AT - Central Excise

Clandestine Removal - Grey Fabrics - Evasion of Central Excise Duty - diversion into Domestic Tariff Area (DTA) in guise of clearance to the said EOU unit of West Bengal and failed to get the goods re-warehoused at the said EOU - HELD THAT - The responsibility of transportation of goods from factory is upon the M/s Neeraj Exim. The contract produced by the appellant clearly shown the delivery term as Ex-factory - It is also found that the appellant has contended that they had followed the procedure as laid down in law for clearances of goods to M/s Neeraj Exim and department has not disputed on the genuineness of CT-3 certificate issued by the department and re-warehousing certificate issued by the Jurisdictional officer of M/s Neeraj Exim - this aspect has not been considered by the Ld. Commissioner in the present matter. Since the department has made the allegation of non-re-warehousing of the goods at the consignee s end, it has to prove the same by substantial evidence and it cannot be made on assumption. It has to be shown as if the goods were not warehoused then where were the same diverted. In present case there is no evidence of diversion of goods. It is also found that on the one hand the Revenue has made demand of central excise duty on goods consumed in the finished goods and on the other hand it is demanding duty on the finished goods which is wrong. Even if there is any duty demand, the same shall be restricted only upon finished goods. The raw material duty cannot be demanded as the same were consumed for intended purpose of manufacture. This aspect also not properly considered by the Ld. Commissioner. Since the issues have not been dealt with in a proper manner by the Learned Commissioner, the matter needs to be reconsidered as a whole - Appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues involved:
The issues involved in the judgment are duty demand and penalty imposed upon the Appellant, confiscation of goods and imposition of fine.

Duty Demand and Penalty:
The Appellant, a 100% EOU engaged in manufacturing Polyester grey fabrics, was alleged to have diverted goods and created fictitious clearance documents, evading payment of duty. The show cause notice proposed a demand of central excise duty on clandestinely cleared dyed grey fabrics and partially oriented yarn, along with interest and penalty. The demands were confirmed by the adjudicating authority, leading to the present appeals.

The Appellant argued that they complied with all conditions of the rules and regulations, clearing goods against Form CT-3 and receiving payment. They emphasized the genuineness of the CT-3 form, warehousing certificate, and payment, asserting that the duty demand was unsustainable. The Appellant cited various judgments in support of their position.

The investigating authority allegedly provided no evidence apart from a report to prove that goods were not received by the intended party. The Appellant, on the other hand, produced re-warehousing certificates, proof of payment, and contracts to demonstrate that the goods were received.

Demand on Raw Materials:
The Appellant contended that duty cannot be demanded on raw materials used in the final products if duty has already been demanded on the final products. They cited decisions to support their argument.

The Revenue supported the findings of the Commissioner, who confirmed the demand based on the alleged diversion of goods and failure to re-warehouse them at the intended location. However, the Commissioner did not consider crucial aspects such as the genuineness of certificates and the responsibility for transportation as per the contract.

The judgment found that the Revenue's demand on both raw materials and finished goods was incorrect. It emphasized that duty should only be restricted to finished goods, as raw materials were consumed for the intended purpose of manufacturing.

Remand Order:
The Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh decision. The Authority was directed to reconsider the issues properly and provide a personal hearing to the Appellant within a specified timeframe. The appeal was allowed by way of remand to the Adjudicating Authority.