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TMI Blog2023 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the department to show proof that the said scrap has been manufactured in the factory. No investigation was conducted to show the purchase of raw material, deployment of labour, consumption of electricity etc. to prove the production of the scrap. Understandably, huge quantities of scrap, involving a duty of about Eighty Lakhs cannot be done without commensurate production of primary materials i.e. bars, rods, etc; no such discussion is seen either in the show cause notice or in the Order-in-Original - It is found that not even a simple stocktaking of the raw material, finished product, the scrap generated was undertaken. The Department has failed to substantiate the allegation of clandestine removal of scrap by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of proviso 2 Section 11A of Central Excise Act 1944 along with interest and penalty. The proposals in the show cause notice were confirmed vide Order-in-Original dated, 01.11.2012. Hence, this appeal. 2. Shri Naveen Bindal, learned Counsel for the appellants submits that the appellants have their head office located at a distance in the same city. He was conducting trading from that premises; though at times, the suppliers mentioned the address of manufacturing premises in the invoices issued by them for the scrap, the trading of the scrap was on account of their head office only and therefore, the same was not entered in the Central Excise Records maintained at the factory. He submits that it is not in dispute that they have pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terates the findings of the OIO and submits that the appellants have not intimated the department about their intention to use the manufacturing premises also for the trading purposes; they have clearly violated the provisions of Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and( 2) of Central Excise Rules, 2002 and therefore, they have rendered themselves liable to pay Central Excise duty on the scrap removed by them from the registered premises i.e, the factory . 5. Heard both sides and perused the records of the case. The allegation by the Revenue is that the appellants have removed scrap from their manufacturing premises and have not paid the applicable Central Excise duty on the same and that they have not got the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the raw material, finished product, the scrap generated was undertaken. On this count itself, the show cause notice is not legally sustainable. We find that Hon ble Allahabad High Court, in the case of Continental Cement Company 2014 (309) ELT 411 (All.), observed that: 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the books have been proved. 7. In view of the considered opinion that the Department has failed to substantiate the allegation of clandestine removal of scrap by the appellants. In fact, we find that the show-cause notice makes a bare averment that the appellants have violated Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and (2) of Central Excise Rules, 2002 and for the reason, Excise Duty payable is demanded under the proviso to Section 11A of Central Excise Act 1944. As no other penalty, for violation of the provisions of the Act and the rules, if any, is proposed in the show cause notice, imposition of penalty even for not obtaining registration cannot be considered at this stage. We are of the considered o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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