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2020 (12) TMI 31 - AT - Central ExciseClandestine removal - applicability of Standard Input Output Norms (SION) of DGFT Policy - SION norms as per proviso to condition 3(d) of Notification No. 52/2003-CUS as amended during the period 2012-13 to 2016-17, complied with or not - duty has been demanded on the basis of an audit objection on difference in production arrived by taking input output ratio @ 95% based on SION and that shown in their Form 3CD, ER-5 /ER-4 returns - extended period of limitation - suppression of facts or not - Scope of SCN. Scope of SCN - HELD THAT:- The Notification No. 52/2003-CUS has been issued in terms of sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and is an exemption notification. It does not prescribe any method/ procedure to determine quantum of production under Central Excise Act for demand of duty. Section 3 of the Central Excise Act –being the charging section, stipulates that duty is to be charged on the goods produced or manufactured - It is found that no physical verification of input consumption qua finished goods manufactured thereto was carried out by the department. The duty has been demanded on the basis of audit objection without causing any investigation. The objection of audit cannot be the basis or reason to believe to further investigate the matter and cannot be the sole ground for holding clandestine manufacture and removal, in absence of any corroborative evidence. It is observed from records that neither investigation has been carried out from any buyer of finished goods nor from any transporter nor any flowback of funds was checked and neither any statement brought on record to substantiate clandestine removal without payment of duty. It is found that no SION number was given in the show cause notice while learned Adjudicating Authority has relied upon SION number C-460 & C-514. Thus, he has travelled beyond the Show Cause Notice. The Tribunal in the case of M/S. SARADHA TERRY PRODUCTS LTD. AND SHRI K. JAYARAJ VERSUS CCE, SALEM [2015 (1) TMI 678 - CESTAT CHENNAI] held that in absence of evidence of removal of excess yarn or finished goods without payment of duty, duty demand not justified purely on basis of input-output norms (SION) without adequate and corroborative evidence of excess utilization of cotton yarn or diversion of yarn. In the present case, it is found that there is neither any corroborative nor any other evidence brought on record to substantiate clandestine removal without payment of duty. The deemed production arrived on presumption for demand of duty is not permissible under Section 3 of Central Excise Act, 1944. The learned Adjudicating Authority merely relied upon standard input-output norms (that too without disclosing any relevant SION SNo.) to confirm the demand of duty and to hold the charge of clandestine removal of goods without payment of duty. Thus, the same cannot be made basis for determining the duty liability, in absence of any evidence to justify the clandestine manufacture / clearances. Extended period of limitation - Suppression of facts or not - Section 11A of Central Excise Act, 1944 - HELD THAT:- The allegation of suppressing the facts from the department does not hold good in the event of periodic audit of both the appellant assessees. There is no other evidence in the impugned order to show that the appellants have willfully suppressed the facts from the department in order to evade payment of duty. As such extended period of limitation cannot be invoked in the present case - reliance can be placed in the case of COLLECTOR OF C. EX. VERSUS MALLEABLE IRON & STEEL CASTINGS CO. (P) LTD. [1997 (12) TMI 123 - SUPREME COURT]. Appeal allowed - decided in favor of appellant.
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