2018 (12) TMI 1950 - AT - Central Excise

Clandestine Removal - output as per the SAIL norm or not - public sector undertaking - HELD THAT - In this case no investigation has been taken up by the department regarding the use of raw material electricity sale of the raw material mode of transport etc. to sustain alleged clandestine removal and covered by the decision of RA CASTINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX. MEERUT-I 2008 (6) TMI 197 - CESTAT NEW DELHI and M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA OTHERS 2014 (9) TMI 243 - ALLAHABAD HIGH COURT . It is also found that the show cause notice proposed to follow the output norm being obtained by the SAIL which is highly complex integrated plant having latest technology and infrastructure. It is not possible for the unit like appellant to have as same technology and infrastructure as available to the SAIL in this case and the production norm is treated to be identical. The department has not taken this much of the evidence into account by alleging the clandestine removal on the part of the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Allegation of clandestine removal based on SAIL norm without sufficient evidence.

Analysis:
The case involved an appeal against an order passed by the Commissioner following a show cause notice. The main issue revolved around the department's allegation of clandestine removal by the appellant based on the output norm of a public sector undertaking, SAIL, without substantial evidence to support the claim. The Tribunal noted that no investigation was conducted regarding various crucial factors like raw material usage, electricity consumption, sale of raw material, and mode of transport to substantiate the accusation of clandestine removal. The Tribunal referenced previous judgments to emphasize the necessity of thorough investigation in such cases, citing cases like RA Castings Pvt. Ltd. Vs. CCE, Meerut-I and Continental Cement Company Vs. Union of India. It was highlighted that the production norm set by SAIL, a technologically advanced entity, cannot be automatically applied to a different unit without considering the differences in technology and infrastructure available to each entity. The Tribunal concluded that the department failed to provide sufficient evidence to prove the alleged clandestine removal by the appellant, leading to the decision to set aside the impugned order and allow the appeal with any consequential benefits.

This judgment underscores the importance of conducting a comprehensive investigation and providing substantial evidence before alleging clandestine activities against a party. It highlights the need for a detailed examination of various operational aspects and technological capabilities of different entities before making assumptions based on industry norms. The decision serves as a reminder for authorities to adhere to established legal principles and ensure a fair and evidence-based approach in such matters to uphold the principles of natural justice and fairness in legal proceedings.