2018 (2) TMI 715 - AT - Central Excise

Clandestine removal - it has been alleged that the Appellant-ship breakers have indulged in clearance of scrap/steel plates clandestinely without payment of duty - Held that - In the absence of the detailed analysis of the evidences it is difficult to ascertain the facts alleged in the SCN. It is prudent to remand the matters to the adjudicating authority to analyse the evidences in detail and record findings on the said evidences relied upon in raising the demands and proposing penalties against the respective Appellants - Appeal allowed by way of remand.

Summary

Issues:
- Wrong availment of CENVAT credit by ship breaking companies
- Allegations of clearance of scrap/steel plates without duty payment
- Confessional statements by directors as evidence
- Applicability of Rule 26 of Central Excise Rules, 2002
- Diversion of scrap to re-rollers
- Lack of detailed analysis of evidences by authorities

Analysis:
1. The Appeals involved the issue of wrong availment of CENVAT credit by ship breaking companies and allegations of clearing scrap/steel plates without paying duty. The Appellants cleared metal scrap/plates through a broker who availed CENVAT credit on duty paid. Investigations revealed invoices were issued in the name of ingot manufacturers, but inputs were diverted to re-rollers. Evidence included statements and documents collected from the broker's premises. Demands were confirmed based on these findings.

2. The Appellants contested the conclusions of the ld. Commissioner (Appeals), arguing that directors' confessional statements were not retracted and should not be binding. They claimed directors never admitted to clearing old plates/waste scrap and were unaware of any diversion. The Appellants emphasized the lack of investigation at the receiver's end and challenged the sustainability of demands based solely on statements without thorough verification.

3. The Appellant's representative argued that Rule 26 of Central Excise Rules, 2002 did not apply as the broker did not physically possess the goods. The Revenue, on the other hand, contended that ship-breaking scrap diverted to re-rollers through incorrect invoicing was economically unviable for ingot manufacturing. They referenced a Tribunal judgment and highlighted the detailed entries in the broker's diary indicating cash transactions with re-rollers.

4. The Tribunal noted a lack of detailed analysis in the authorities' orders regarding the collected evidence, especially the statements of the broker's Director and Accountant. Both parties agreed to remand the matters to the adjudicating authority for a thorough examination of the evidence and to allow the Appellants to present supporting evidence. The Tribunal allowed the Appeals by remanding the case for detailed analysis and findings on the evidences presented.