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TMI Blog2016 (5) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... in which case there would be excess consumption of electricity, which fact was not examined by the Department. Consequently, on the basis of presumption, a serious charge of clandestine manufacture and removal of sugar has been imposed, which is wholly erroneous. The charge of clandestine removal of sugar is required to be discharged by the Department by production of sufficient and tangible evidence, which in the instant case was lacking. In the absence of any evidence of extra consumption of electricity purchase of extra raw material, absence of evidence of extra goods being manufactured, we are of the opinion, that no case is made out for clandestine manufacture of sugar and its removal. By applying the judgment of Division Bench of this court in the case of Continental Cement Company vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT], the demand of duty on the ground of clandestine removal cannot be recovered on the basis of presumptions and assumptions. Clinching evidence is required with regard to purchase of raw materials, use of extra electricity, sale of final products and realisation of sale proceeds before imposing any demand. As in the absence of any such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the rise in temperature, inasmuch as, carbon dioxide is generated and the carbon dioxide gas bubbles in the molasses increases the volume and consequently, shows a higher reading in the physical stock at the time of dip reading. Further, in order to ensure that the temperature of the molasses does not exceed beyond alarming limits, the steel tanks are frequently sprayed with water in order to avoid auto combustion and also to control the temperature. Not only the above, since sugar is present in the molasses due to decomposition foaming is generated in the molasses and consequently, water is sprayed on the outer surface of the steel tanks. The water so sprayed on the tanks often finds it way into the tanks through the gaps in joints and open spaces at the top. This ultimately results in the increase in the volume of molasses. Similarly, rain water also increase the volume of molasses which are kept in open pucca pits. 3. In view of the difficulty in the storage of molasses, physical verification is done from time to time and the volume of molasses is recorded. As per practice, a physical verification was done on 7.4.2006 and molasses to the tune of 5000 quintals was found i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the appellant and Sri Siddharth Shukla, the learned counsel for the Department. 8. We find that demand of duty is based on an assumption that declaration of excess quantity of molasses by the appellant is indicative that the appellant must have purchased and crushed the additional quantity of sugar cane and that corresponding quantity of sugar was manufactured and cleared clandestinely. This assumption for imposition of duty and penalty is based purely on surmises and conjectures and is totally unwarranted. 9. We find that the sugar industry is a completely controlled industry. Sugar cane is the basic raw material from which sugar is manufactured. Sugar cane is procured from the cane centers which are allotted by the Cane Commissioner. The sugar factory is under an obligation to purchase cane only from the cane centers and from nowhere else. The cane, which is purchased from the cane growers, is received in the factory premises which is weighed on computerized weigh bridge under the supervision of a representative of the Cane Society. The purchase and issue of sugar cane are accounted and documents are prepared on a daily basis. The sugar, which is manufactured i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtra consumption of electricity purchase of extra raw material, absence of evidence of extra goods being manufactured, we are of the opinion, that no case is made out for clandestine manufacture of sugar and its removal. 14. In Continental Cement Company vs. Union of India, 2014 (309)E.L.T. 411 (All.), a Division Bench of this Court held that the demand of duty on the ground of clandestine removal cannot be recovered on the basis of presumptions and assumptions. The Court held that clinching evidence is required with regard to purchase of raw materials, use of extra electricity, sale of final products and realisation of sale proceeds before imposing any demand. The Court held that in the absence of any such evidence demand cannot be imposed. The said decision is wholly applicable in the instant case. 15. Consequently, the authority including the Tribunal committed an error in imposing payment of duty on clandestine removal of sugar, which is based on surmises and conjectures and on assumption without there being any tangible evidence. The payment of duty, interest and penalty consequently cannot be sustained and are set aside. Question No.B is, accordingly, answered in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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