2019 (1) TMI 1101 - AT - Central Excise

Clandestine manufacture and removal - manufacture of Colour TVs as also in sub-assemblies of Colour TVs - appellant claims that the entire case of the Revenue is based upon assumptions and presumptions and without any evidence to establish the actual manufacture of the goods in the appellant s factory and clearance of the same - Held that - The Revenue s entire case is based upon the retracted statements of Bhatia deposing that the said components after clearance were sent to the factory of M/s.Viera Electronics. There is no evidence produced by the Revenue showing transportation of the said components to the factory premises of M/s.Viera Electronics. The Revenue s allegation relate only to the alleged diversion of unaccounted PCBs imported by Bhatias to their factory. There is no whisper of procurement of other raw materials required to be used in the manufacture of CTVs. In the absence of any allegation/evidences of procurement of other requisite raw materials the allegations of clandestine manufacture of around one and a half lakh CTVs cannot be upheld. It is well settled law and does not require the support of the precedent decisions that the allegations of clandestine activities are required to be established beyond doubt being quasi-judicial proceedings, s by production of positive and tangible evidences. Mere doubts or allegations made on the frivolous grounds and on the unfounded basis of belief by the officer cannot be adopted to establish the same. Revenue itself is doubting the divergence of goods to the appellant s factory when the adjudicating authority is using the expressions that the appellants might have used the same in the manufacture of Colour TVs. The distance between might have and must have is required to be covered by production of positive evidences. The demand cannot be upheld on the basis of surmises and conjectures. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Confirmation of demand and imposition of penalties against M/s. Veira Electronics Pvt. Ltd. and associated parties.
2. Allegations of clandestine manufacture and clearance of goods.
3. Validity of evidence and statements used to support the allegations.
4. Consistency of adjudication between different parts of the show cause notice.

Issue-wise Detailed Analysis:

1. Confirmation of Demand and Imposition of Penalties:
The Commissioner of Central Excise, Noida confirmed a demand of Rs. 4,02,85,225/- against M/s. Veira Electronics Pvt. Ltd., along with interest and a penalty of the same amount. Additional penalties were imposed on individuals and associated entities, including Rs. 50.00 Lakhs on Shri Ankit Maini, Rs. 25.00 Lakhs on M/s. Shivam Enterprises, and Rs. 50.00 Lakhs each on Shri Sharan Maini and Shri V.K. Maini. The Tribunal examined the validity of these penalties in light of the evidence presented.

2. Allegations of Clandestine Manufacture and Clearance:
The Revenue alleged that M/s. Veira Electronics Pvt. Ltd. and associated entities were involved in clandestine manufacture and clearance of goods to avoid exceeding the exemption limit. The investigation included searches of multiple premises and the recovery of documents such as loose slips and notebooks. Statements from individuals like Shri Ashwini Kapoor suggested that M/s. Shivam Enterprises was involved in paper transactions rather than actual manufacturing. However, the Tribunal noted the lack of concrete evidence to support these allegations.

3. Validity of Evidence and Statements:
The Tribunal scrutinized the evidence presented by the Revenue, including retracted statements from Shri H.S. Bhartia and Shri Amanpreet Bhartia, which alleged that imported components were diverted to M/s. Veira Electronics. The Tribunal found no corroborative evidence of transportation or utilization of these components in manufacturing. The Tribunal emphasized that allegations of clandestine activities must be supported by positive and tangible evidence, not mere assumptions or presumptions.

4. Consistency of Adjudication:
The show cause notice had two parts: "Part-A" and "Part-B". "Part-A" was adjudicated by the Principal Commissioner of Central Excise, New Delhi, who dropped the proceedings against the noticees based on the same set of facts and evidence. The Tribunal noted that the same set of evidence was used in "Part-B" adjudicated by the Commissioner of Central Excise, Noida, who confirmed the demands. The Tribunal highlighted the inconsistency in the adjudication process and concluded that the demands in "Part-B" should also be vacated.

Conclusion:
The Tribunal set aside the confirmation of demand and penalties against M/s. Veira Electronics Pvt. Ltd. and associated parties. It emphasized the need for concrete evidence to support allegations of clandestine manufacture and clearance and noted the inconsistency in adjudication between different parts of the show cause notice. The appeals were allowed with consequential relief to the appellants.