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TMI Blog2025 (3) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... ff. Some of the final products/finished goods manufactured by the Appellant, such as livergen Liquid, Cosydril Syrupwere subject to the levy of State Excise under the Bengal Excise Act, 1909 owing to the presence of alcohol therein whereas certain final products were exempted from the levy of central excise duty. Therefore, the Appellant had been manufacturing a mix of excisable and non-excisable final products and had an annual turnover of around Rs. 6 Crores during the relevant period. 2.2 In the course of audit by the internal audit branch in 2013, it was inter alia observed that the quantitative details of liquid medicament was reflected in the tax audit report in Form 3CD in"KL" (i.e. its primary unit of measurement) whereas in the monthly excise returns (ER-1) the reporting of medicaments was in "Boxes/Units"(i.e. the secondary unit of measurement in which they were marketable) making them un-comparable. Therefore, the Appellant was required to reconcile the alleged discrepancy. It would be pertinent to note that a straight-jacket comparison of the quantitative clearance in ER-1 vis-à-vis 3CD was in any event not possible as the basis of reporting in ER-1 Returns (onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand proposed in the SCN. It may again be reiterated that the value of clearances as reflected in the Audit Report in Form 3CD vis-à-vis the excise records has never been in dispute. Hence the present Appeals. 3. The Ld.Consultant for the appellants submits the following :- A. The impugned order in the instant case has been passed in flagrant violation of the principles of natural justice inasmuch as the personal hearing in the said case was granted by one Commissioner way back in December 2015 whereas the notice was adjudicated by another Commissioner in March 2017 disregarding the Appellant's prayer for grant of personal hearing A.1 The Appellant submits that the impugned order violation the principle of audi alteram partem (the right to be heard), as the personal hearing was granted by one Commissioner in 2015, but the order was passed by another Commissioner in 2017. A.2 Despite the Appellant‟s request for a new hearing date, the Adjudicating Authority disregarded this request and passed the order without allowing the Appellant an opportunity to present its case in person. This constitutes a violation of the fundamental principle of nature justice, which dic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from their letter dated 09.06.2017. B.4 Even otherwise, it may be noted that the learned adjudicating authority has not found any infirmity in the sales/clearance value as reconciled by the statutory auditor as there was none. Therefore, the certificate given by the statutory auditor who had also signed the Form 3CD could not have been dis-regarded by the Ld. Adjudicating Authority. He relied on M/s Gillette India Ltd. v Commissioner of Central Excise, Chandigarh-I" (2023 (11) TMI 154 - CESTAT Chandigarh) and "M/s Kirloskar Brothers Ltd. v Commissioner of CGST & Central Excise, Kolkata" (2025 (1) TMI 890 - CESTAT Kolkata). B.5 In the instant case, it is an admitted position from the statutory Auditors that mismatch in the production figures as reported in the Certificate vis-à-vis annexure thereof was because wrong annexure was enclosed. Therefore, the inference drawn by the Learned Adjudicating Authority that the production figures also had a bearing on the closing stock quantity and the valuation thereof, was completely over blown and extraneous. Even otherwise it is submitted that the Learned Adjudicating Authority could not do a pick and choose from Form 3CD which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed herein below: "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 found that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department." C.3 Reliance is further placed on "Micky Metals L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to goods on which central excise duty is leviable. It would be a matter of common sense and understanding that, since Form 3CD provides a comprehensive account of all goods manufactured over the year, there will naturally be a distinction between the goods covered under Form 3CD and those reported in ER-1. Goods subject to State Excise Duty are not included in Form 3CD, as they fall outside the scope of Central Excise Duty. E. The Learned Authorities cannot invoke extended period of limitation, and the allegation of suppression of facts is untenable, given that the entire case of the Learned Authorities is based solely on the comparison of two public documents. Consequently, the imposition of any related penalty is also not warranted. E.1 The Ld. Adjudicating Authorities have invoked the extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944. The extended period of limitation can only be invoked if the twin conditions of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any provision of the Excise Act or the rules made thereunder and intent to evade payment of duty are satisfied. The extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Tax Audit Report (Form 3CD) and ER-1 Returns for the period 2010-11 and 2011-12. Therefore, the issue arises that "Can on the basis of difference between figures of Form 3CD and ER-1 Returns, it be alleged that the appellants are engaged in the activity of clandestine clearance of the goods. The said issue has been examined by this Tribunal in the case of Micky Metals Ltd. vs. CCE, Bolpur [2023 (7) TMI 357-CESTAT KOLKATA], wherein this Tribunal has observed as under :- "7. Considered the facts that in this case the demand of duty sought from the appellant on the basis of difference in figures of audit report and ER-1 return for the year 2006-07. The appellant being a public limited company the financial records are available on net all the times. But, the show cause notice has been issued on 01.03.2011 by invoking extended period of limitation. 8. We further take note of the fact that apart from difference in figures of financial records and ER-1 return, no investigation was conducted to establish clandestine removal of goods which is serious allegation. No statement of has been recorded. In that circumstances the charge of clandestine removal of goods not sustainable as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department." 10. Further in the case of Tally Solutions Pvt.Ltd. v. CCE, Bangalore [2020 (41) GSTL 520 (Tri.-Bang.)], the Tribunal observed as under:- "8. The appellants have vehemently fought on the issue of limitation. They pleaded that SCN was issued on 5-9-2011 whereas the normal period expired on 10-9-2010; the SCN was issued on the basis of the Audit of records maintained by the appellants; therefore, extended period cannot be invoked by alleging suppression and that they were also submitting/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the normal period of limitation, which the Revenue has failed to do so. 8. In that circumstances, we hold that demand pertaining to extended period of limitation is not sustainable and whole of the demand is beyond the normal period of limitation. Therefore, on limitation also, the appeals succeed. 9. Further, we find that the allegation of clandestine manufacture and removal is a serious charge and the same is required to be proved with tangible evidences and no effort has been made by the Revenue in support of their allegation to prove that the appellant was engaged in the activity of clandestine manufacture and removal. 10. We take note of the fact that the hearing in this case was completed by one Commissioner in 2015, who was transferred. Later on another Commissioner passed the impugned order in the year 2017, which is in gross violation of principles of natural justice. On this ground alone, the impugned order is not sustainable. 11. In that circumstances, we do not find any merit in the impugned order. Therefore, no demand of duty along with interest is sustainable against the appellant alleging clandestine manufacture and clearance, and no penalties can be impos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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