CX - In order to bring home charges of clandestine removal it is necessary to prove same by some positive evidence: CESTAT
By TIOL News Service
MUMBAI, AUG 14, 2017: CENTRAL EXCISE duty demand of Rs.4.25 crores was confirmed by the CCE against the appellant and penalties of Rs.25 lakhs, Rs.20 lakhs and Rs.10 lakhs were imposed on the Managing Director, Executive Director and the Assistant Manager respectively.
All of them are in appeal before the CESTAT and submit that the demand/penalties has been wrongly confirmed/imposed as there is no iota of evidence of clandestine removal; that there is no evidence of illegal procurement of raw material, utilization of power/deployment of labour/absence of any buyer of alleged shortages/removal and transportation of goods/receipt of consideration etc. Case laws viz. Nova Pharmaceuticals Pvt. Ltd. - 2014-TIOL-15-CESTAT-AHM, Flevel International - 2015-TIOL-2230-HC-DEL , Air Carrying Corp. - 2009-TIOL-466-HC-MUM-CX were cited in support.
The AR while reiterating the findings of the impugned order also sought to derive mileage from the apex court decisions in Alnoori Tobacco Products - 2004-TIOL-85-SC-CX and D. Bhoormull - 2002-TIOL-253-SC-CUS .
After considering the submissions and perusal of the records, the Bench observed -
+ The demands are based upon the comparison of computer sheets with the RG-1 and also some of the shortages was arrived at physical verification.
+ I find that it is not the case of the revenue that the goods were not returned back to Silvassa Unit after jobwork or that the goods were cleared elsewhere without payment of duty. Even the GRN and delivery challans related to processing of goods were not held to be forged or invalid which clearly shows that the goods were indeed jobwork goods. In such case when there is no evidence of goods elsewhere, there is no reason to uphold the demand against Appellant Unit.
+ The absence of challan or documents towards reprocessing cannot be a ground to allege shortages and demand duty. Similarly in respect of other shortages, the Appellant had provided reconciliation statements. However, the same was not accepted by the adjudicating authority by discrediting the records and submission of the Appellant.
+ I find that the whole case has been made on the ground that the alleged shortages were as a result of clandestine removal of goods. Further reliance has been placed upon the statement of Assistant Manager wherein he accepted the shortages of some quantity of shortages. In order to bring home the charges of clandestine removal it is necessary to prove the same by some positive evidence.
+ Mere shortages in stocks would not ipso facto lead to demand on account of clandestine removal. No evidence in the form of procurement of any excess raw material, production of goods, clearance and transportation evidence of such alleged short found quantity, receipt of consideration on account of clandestine clearance has been brought on record. Not a single instance of clandestine removal of goods has been brought on record.
+ It has been consistently held that in absence of corroborative evidences of excess consumption of raw material, actual removal of unaccounted finished goods, identification of parties, receipt of sale proceeds, transportation of goods, statements of buyers the charges of clandestine removal are not sustainable.
+ Since in the present case no evidence of clandestine removal of goods has been brought on record by supporting corroborative evidences, I do not find any merit in the impugned order.
The CE duty demand was set aside and so were the penalties.
The appeals were allowed with consequential relief.
(See 2017-TIOL-2918-CESTAT-MUM)
