2018 (11) TMI 1016 - AT - Central Excise

Clandestine removal - allegation mainly based upon the electricity consumption the project report furnished to bank for procurement of loan capacity of machine installed in the factory statements of Director as also the other workers of the factory - penalty. Held that - Findings of clandestine removal are based upon the calculations which in turn are based upon the working of machines and consumption of electricity. Such findings which are based upon the consumption of electricity have been held to be as no sustainable for arriving at the findings of clandestine removal - The observations of the Adjudicating Authority is that the buyers reflected in some of the invoices were found to be non-existing. We find that same cannot be adopted as a reason for arriving at findings of clandestine removal inasmuch as such sales were effected on the basis of Central Excise invoices. It is well settled law that the onus to prove the clandestine removal is upon the Revenue and is required to be discharged by production of sufficient and positive evidence - In the present case there is no evidence at all produced by the Revenue to show that the appellant had clandestinely manufactured and cleared their final product - demand not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues: Allegations of clandestine removal, Calculation based on electricity consumption, Existence of sufficient evidence

Allegations of Clandestine Removal:
The appellant, engaged in manufacturing Poly Propylene Glasses, faced allegations of clandestine removal following a visit by Central Excise Officers. The officers found no incriminating evidence during the visit, but based allegations on discrepancies in production levels compared to previous years. The Adjudicating Authority relied on factors like electricity consumption, project reports, and statements of the Director and workers to conclude suppression of production. However, the Tribunal noted that findings of clandestine removal based on electricity consumption were not sustainable, citing precedents like R.A. Castings Pvt. Ltd. vs. Commissioner. The Tribunal emphasized the lack of concrete evidence reflecting the appellant's involvement in clandestine activities.

Calculation Based on Electricity Consumption:
The Adjudicating Authority based its findings on clandestine removal on calculations related to the production capacity of the machines and electricity consumption. The Authority compared production figures from previous years to 2009-10, concluding that production was suppressed in earlier years. However, the Tribunal deemed these calculations insufficient to prove clandestine activities, highlighting the need for substantial evidence beyond electricity consumption data. The Tribunal referenced past judgments to emphasize the importance of concrete proof in establishing allegations of clandestine removal.

Existence of Sufficient Evidence:
The Tribunal emphasized that the onus to prove clandestine removal lies with the Revenue, requiring the production of substantial and positive evidence. In this case, the Tribunal found a lack of evidence presented by the Revenue to demonstrate that the appellant engaged in clandestine manufacturing and clearance of products. The Tribunal noted that discrepancies in buyer details on invoices and non-existent buyers did not necessarily indicate clandestine activities, especially when sales were made under Central Excise cover and duty payment. Ultimately, the Tribunal held the impugned order unsustainable due to the absence of concrete evidence, setting it aside and allowing the appeals with relief to the appellants.

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