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2023 (9) TMI 61 - CESTAT CHANDIGARHClandestine removal - removal of scrap from manufacturing premises - Non-payment of Central Excise Duty - violation of Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and( 2) of Central Excise Rules, 2002 - HELD THAT:- Department has not come out with any proof to show that the said scrap was not purchased by the appellant or to show that the scarp was generated in the factory. As Central Excise duty is on the manufacture of scrap, it is incumbent on the part of the department to show proof that the said scrap has been manufactured in the factory. No investigation was conducted to show the purchase of raw material, deployment of labour, consumption of electricity etc. to prove the production of the scrap. Understandably, huge quantities of scrap, involving a duty of about Eighty Lakhs cannot be done without commensurate production of primary materials i.e. bars, rods, etc; no such discussion is seen either in the show cause notice or in the Order-in-Original - It is found that not even a simple stocktaking of the raw material, finished product, the scrap generated was undertaken. The Department has failed to substantiate the allegation of clandestine removal of scrap by the appellants. In fact, the show-cause notice makes a bare averment that the appellants have violated Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and (2) of Central Excise Rules, 2002 and for the reason, Excise Duty payable is demanded under the proviso to Section 11A of Central Excise Act 1944. As no other penalty, for violation of the provisions of the Act and the rules, if any, is proposed in the show cause notice, imposition of penalty even for not obtaining registration cannot be considered at this stage. Such a show-cause notice bereft of any investigation and proof thereof cannot be sustained; for the reasons, the show-cause notice and the impugned order are liable to be set aside - Appeal allowed.
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