Home Case Index All Cases Central Excise Central Excise + HC Central Excise - 2023 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (4) TMI 124 - HC - Central ExciseClandestine Removal - production by showing lesser production in the ER-1 return - Demand of Central Excise Duty with reference to the installed capacity when the finished goods are not notified under Section 3A of the Central Excise Act, 1944 - no material to show any unrecorded manufacture or clearance of the finished goods - reason for issuing show-cause notice to the assessee was based on the quantity of production difference between the annual installed production capacity statement as declared in the ER-7 statement and the ER-1 return - allegation of clandestine removal is solely based upon the annual installed capacity of the unit of the assessee as mentioned in the ER-7 return compared with the ER-1 statements - suppression of facts or not - extended period of limitation. HELD THAT:- The allegation is one of the suppression of the production and clandestine removal of excisable goods without payment of excisable duty. Therefore the burden of proof is on the department to establish that the charge of clandestine removal for which there should be cogent and relevant material to pen down the assessee on a charge of clandestine removal. In the instant case, it is found there was no material which was available with the Commissioner to come to such a conclusion. As pointed out earlier, the genesis of the entire matter is the audit objection. There are two known ways of dealing with an audit objection. Firstly, the respondent department will examine the objection and answer the audit para by giving an explanation. In the event, the same is found to be not acceptable and the findings are reiterated, then the department will have to conduct an enquiry into the aspect and satisfy itself that there are materials to proceed against the assessee and then issue the show cause notice clearly disclosing the case the assessee has to meet. Unfortunately the observation made in the audit objection was taken by the department as gospel truth and without conducting any enquiry or investigation as the authority straight away proceeded to issue the show cause notice. In fact, the reply given by the assessee to the Superintendent, Central Excise department at the first instance was not even taken note of and mechanically the show cause notice was issued. The learned tribunal failed to see that the charge of clandestine removal is very serious charge and to establish the same there should be cogent and relevant materials. Extended period of limitation - suppression of facts - HELD THAT:- Admittedly, the audit objection was based upon the information culled out from the return filed by the assessee and therefore there can be no charge of suppression or willful mis-statement and consequently the extended period of limitation could not have been invoked. The learned tribunal did not take enough effort to examine the facts of the case which are very crucial in the case on hand qua the allegations set out in the show cause notice - For invoking extended period of limitation, the revenue ought to have established wilful mis-statement or suppression on the part of the assessee which has not been brought on record. Thus, the extended period of limitation could not have been invoked as well as the penalty could not have been imposed since there is no charge of willful mis-statement or suppression made against the assessee - the department has failed to discharge the onus cast upon him to prove the charge of clandestine removal. The order passed by the tribunal as well as the adjudicating authority are set aside - Appeal allowed.
|