By TIOL News Service

HYDERABAD, JULY 21, 2014: THE appellant is in appeal before the High Court against the order of the Tribunal confirming demand of duty on clandestine removals.

The appellant is a small-scale industrial unit engaged in the manufacture of acid slurry, soap oil and waste weak acid since 1989-90. The main raw materials for manufacture of acid slurry are: linear alkyle benzene (LAB), oleum and water. The appellant was availing Modvat credit of duty paid on the raw materials after filing necessary statutory declarations before the concerned authorities.

There was an inspection at the premises of the appellant by the Directorate General of Anti-Evasion, Hyderabad certain records were seized. Based on the inspection and the information obtained, a show-cause notice was issued alleging that the appellant had not accounted for purchase of raw material namely, LAB made from a public sector organization, M/s.Tamil Nadu Petro Products.

Aggrieved by the order of Commissioner confirming the demand, the appellant filed an appeal before the CESTAT and the same was dismissed vide 2004-TIOL-446-CESTAT-BANG.

The appellant contended that the order of the Tribunal is purely based on surmises and conjectures and there is no material whatsoever evidencing purchase of LAB by the appellant and the same having been received in the Factory by the appellant. There is no material with respect to manufacture of acid slurry, a product which attracts higher rate of duty and also there is no material evidencing clearance of acid slurry from the premises.

After hearing both sides, the High Court held:

The findings were recorded based on documents recovered and these documents were admitted and not denied by the appellant, though the discrepancy was sought to be explained, as discrepancy of mistake in maintenance of accounts and also on account of un-cleared and unsold stock. There is sufficient adequate material for the Commissioner to have come to a conclusion that the appellant was in fact did manufacture of Acid Slurry by purchasing raw material in third parties names, but failed to account for the manufacture and clearance of the same by paying appropriate duty.

Though arguments were advanced before the Tribunal disputing some of the findings of the Commissioner, on appreciation of the record before them, the Tribunal had come to a different conclusion and affirmed the findings of the Commissioner. There is no contra material to dispute the findings as recorded by the Tribunal. It is well settled that in exercise of the appellate power under Section 35-G of the Central Excise Act, the High Court is bound by the findings of fact as recorded by the Tribunal. Unless the court comes to a conclusion that such findings are based on no material/no evidence whatsoever and such findings are perverse. Therefore the question of law is required to be answered in the negative and against the appellant.

(See 2014-TIOL-1170-HC-AP-CX)