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2017 (11) TMI 280 - CESTAT MUMBAIClandestine removal - shortage of inputs and finished goods - non-use of HDPE/LDPE/LLDPE in the manufacture of PP fabrics - allegation against the Appellant Unit is that they have availed the Modvat Credit of the duty paid on imported inputs, namely HDPE/LDPE/LLDPE without using the same in the manufacture of their finished products - Held that: - We find that such allegation is based upon the statement of employees but not corroborated by any evidence. There is no evidence that the raw material did not enter the factory of the Appellant or were not used in manufacture. None of the records of the Appellant Unit has been held to be non reliable. The Appellant has maintained the whole record of receipt of goods in their factory and their utilization in manufacture of finished goods and nothing contrary has been alleged to these records. No evidence has been adduced to show that the Appellant has used any other raw material other than the imported goods nor any evidence of diversion of imported raw material has been brought on record. In such circumstances merely on the basis of statement of employees it cannot be concluded that the imported raw material has not been used in manufacture by the Appellant. Reliance placed in the case of M/s Vikram Cement (P) Ltd. Vs CCE, [2012 (11) TMI 777 - CESTAT NEW DELHI] wherein it was held that the said statement alone cannot be made basis for arriving at the finding of clandestine removal in absence of other corroborative evidence on record. During the visit of officers no samples were withdrawn which could show the contents of raw material in finished goods which can support the allegation of revenue. The revenue has placed reliance upon the Opinion of Director of Laxminarayan Institute of Technology, Nagpur wherein it has been stated that P.P. Granules are the only raw material required for the manufacture of P.P. Fabrics and HDPE, LDPE and LLDPE granules have no role to play in the manufacture of polypropylene fabrics. That the addition of HDPE/LDPE/LLDPE can reduce the cost of Polypropylene fabrics as the polypropylene is around 30% costlier than HDPE/LDPE/LLDPE etc and their addition in propylene fabrics can affect the quality. We find that such opinion nowhere supports the revenue's allegation and is irrelevant to the case - the Revenue has not been able to establish that the impugned inputs were not used by the Appellants in the manufacture of their finished products. Demand of excise duty on finished goods and raw material - Held that: - mere admission of shortages cannot ipso facto lead to conclusion of clandestine removal of such short found goods. We find that the Appellant from the very beginning had been disputing the shortages and the duty so deposited by them were intimated to have been deposited Under Protest. The clandestine removal cannot be alleged only due to shortages in stock. The Revenue has not rebutted the documentary evidence produced by the Appellants - similarly in respect of shortage of inputs the Revenue has not controverted the contention of the Appellants which was duly supported by 57F Challans under which the inputs had been dispatched to Job Workers. No verification was conducted although the detailed explanation was given by the Appellant in their letter dated 23.12.1997. We find that the revenue had sufficient time to examine the claims of the Appellant as the show cause notice was issued after almost 4 years of receipt of letters from the Appellant. The Appellant had produced the said job work challans which also shows the receipt of the goods after the processes having been carried out by the Job Worker. In such view of the facts of the case, these evidence of the Appellant cannot be discarded by merely terming the same as afterthought. The demand and penalties against the Appellant Unit is not sustainable and we set aside the same - the penalty against Managing Director of the Appellant Company is also not sustainable - appeal allowed - decided in favor of appellant.
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