2018 (5) TMI 1780 - AT - Central Excise

Clandestine removal - respondents had surrendered an unaccounted income of Rs. 150 lakhs to Income Tax authorities on 04/09/2008 - Demand of Central Excise Duty - Held that - Admittedly Central Excise duty is payable of the goods manufactured by the assessee but in this case revenue has not come up with any evidence that respondent has manufactured and clandestinely cleared the goods - no duty is payable by the respondents - appeal dismissed - decided against Revenue.

Summary

Issues:
- Allegation of clandestine manufacture and clearance of goods based on surrendered income before Income Tax authorities.

Analysis:
The case involves an appeal by the Revenue against an impugned order regarding the alleged clandestine manufacture and clearance of goods by the respondents. The respondents were involved in the manufacture of M.S Bars and Angles falling under Chapter 72 of the Central Excise Tariff Act, 1985. During a scrutiny of their financial records, it was discovered that the respondents had surrendered an unaccounted income of &8377; 150 lakhs to the Income Tax authorities. The Revenue contended that this surrendered income was related to excisable goods manufactured and cleared by the respondents clandestinely. A show-cause notice was issued, and duty was demanded based on the surrendered income. The adjudicating authority initially confirmed the demand and imposed penalties. However, on appeal, the Commissioner (Appeals) dropped the proceedings against the respondents, stating that the Revenue failed to provide evidence of clandestine manufacture and clearance of goods, citing a precedent. The Revenue then appealed this decision.

The Tribunal noted that the Revenue did not present any evidence to prove that the respondents were engaged in clandestine manufacture and clearance of goods. The case was solely based on the audit finding that the respondents had surrendered income to the Income Tax authorities. While acknowledging that Central Excise duty is payable on manufactured goods, the Tribunal emphasized the lack of evidence linking the surrendered income to clandestine activities. Citing the precedent of Kipps Education Centre, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal. Consequently, it was ruled that no duty was payable by the respondents due to the absence of evidence supporting the allegations of clandestine activities.

In conclusion, the Tribunal upheld the impugned order, stating that the Revenue failed to substantiate the claim of clandestine manufacture and clearance of goods by the respondents. As a result, the appeal filed by the Revenue was dismissed, and no duty was deemed payable by the respondents in this case.