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2021 (8) TMI 708 - AT - Central ExciseClandestine Removal - demand is based on the comparison of the figures reported in the annexure of the tax audit report for the years 2012-13 and 2014-15 to 2015-16 and ER 6 for preforms - Absence of substantive corroborative allegation - 100% conversion of pre form to PET bottles - percentage of wastage of preforms - time limitation - HELD THAT:- In the instant case, it is seen that the Adjudicating Authority has confirmed the demand of excise duty only on the ground that there are differences in quantity of consumption of preform as per ER 6 and form 3CD as filed by the Appellant by taking into account 100% conversion of preform into PET bottles. It is the case of the department that the said Appellant has manufactured and cleared the said excess PET bottles without payment of excise duty on the same and resorting to clandestine removal. However, it is seen that such allegation is only on the basis of the figure work of the department without production of any other evidence for demand of excise duty for clandestine removal of manufactured goods. The figures in the reconciliation provided by the Appellant between 3CD and ER 6 clearly account for the wastage during the manufacturing process which ranges from 0.40% to 1.60% percentage in different years and the same is within the normal industry average of two percent as per the Appellant’s submission - the lower authority has not at all taken into account the plea of the Appellant as regards wastage of the preform during the manufacturing process whereas the same has been clearly established by the Appellant in its reconciliation provided at all occasions. Hence the order of the adjudicating authority deserves to be set aside as the same is based on assumption and without any cogent evidence for 100% conversion of preform in to PET bottles. The considered view that the Appellant has been able to produce the relevant reconciliations to show that there is no difference in consumption figures as per ER 6 and form 3CD of pre form and the only difference is on account of wastage which has not been considered by the lower authority. Also, for considering 100% conversion of preform into PET bottles, the Ld. Adjudicating authority has not given any basis for the same and has ignored the submission of the Appellant in this regard. Hence, the finding of the Adjudicating authority is devoid of any merits. No investigation has been conducted by the department to prove the allegation of clandestine manufacture and removal of PET bottles in the case and thus the recovery of excise duty merely based on differences in figures of consumption cannot be made by the department. Time Limitation - HELD THAT:- The demand has been raised for the period 2012-13 onwards in July 2018 whereas the spot memo was issued by the Department in August 2014 itself. No explanation has been furthered by the Department in respect of such gross delay in proceeding with the matter. Therefore, the invocation of extended period of limitation is not justified. The demand of excise duty only on assumption and presumption without being substantiated by sufficient evidence, cannot be sustained on merits and is accordingly set aside. Since demand of excise duty is set aside, penalty and interest are also not sustainable - appeal allowed - decided in favor of appellant.
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