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2015 (12) TMI 255 - CESTAT MUMBAI

2015 (12) TMI 255 - CESTAT MUMBAI - TMI - Clandestine removal of goods - Shortage of goods found - Held that:- Records attached to the Panchnama and statements of the factory manager, clearly indicate that the weighment and shortage of raw materials as ascertained was based upon eye estimation. The statement of factory manager clearly indicates that said weighment done by the officers of 1242 Metric Tunes of MS scrap, will be time consuming and the entire exercise is based on eye estimation. I a .....

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in the case of Aum Aluminium P. Ltd. (2012 (4) TMI 557 - CESTAT AHMEDABAD) followed - Decided in favour of assessee. - APPEAL No. E/1756/10-Mum - Dated:- 27-10-2015 - Mr. M.V. Ravindran, Member (Judicial) For the Petitioner : Shri A.M. Chituri, Consultant & Shri K.R. Rathi, Advocate For the Respondent : Shri S.V. Nair, Supdt. (AR) ORDER Per: M.V. Ravindran This appeal is filed against Order-in-Appeal No. SB/78/Th.I/10 dated 29/06/2010. 2. Filtering out unnecessary details, the relevant facts .....

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s manufactured the ingots out of such short found raw materials and cleared without payment of appropriate duty. Appellant did not file any reply to the show cause notice nor appear for the personal hearing granted by the adjudicating authority. The adjudicating authority based upon the records available before him, confirmed the demands raised and also imposed penalties and demanded amount of interest and ordered for penalties of ₹ 4,35,000/-, on shortage of scrap. 3. Aggrieved by such an .....

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one but entire stock is taken by eye estimation, it is her further submission that the demand of duty liability is on the ground that the short found MS scrap is converted and clandestinely cleared. It is her submission that the issue is now squarely covered by the majority order given by this bench, in the case of Aum Aluminium P. Ltd. Vs. CCE Vadodara 2014 (311) ELT 354 (Tri.A) and also for the submission that rule 25 cannot be invoked for in the case, as demand of duty is on the raw materials .....

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section 11AC of Central Excise Act, 1944. It is his further submission that the various grounds taken by the learned counsel is before the tribunal, and not taken before the lower authorities, having accepted the shortage now cannot turnaround and submit that the entire exercise is incorrect. 6. After hearing both sides and perusal of the records, I find that the amount confirmed by the lower authorities is incorrect for more than one reason. 6.1. Firstly, the records attached to the Panchnama a .....

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ndicates that the demand of the duty is on the presumptive manufacturing of Ms ingots out of the shortage of MS scrap noticed by the officers during the course of panchnama on 17.03.2007, both the lower authorities have not recorded any evidence to come to such a conclusion that the appellant had manufactured such ingots and cleared the same clandestinely. 7. I find that the similar issue was decided by the majority order in the case of Aum Aluminium P. Ltd. (supra). I reproduce the relevant par .....

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ufacture the alleged huge quantity alleged to be removed in clandestine manner, and moreover the experts i.e. chartered engineers after visiting and considering the working of the plant, has certified that the production that can be produced by working of the machine, can at most be 430 MT per annum. As rightly observed by the Hon ble Member (J), the working of the machines in the appellant s factory was verified to ascertain the production capacity of the machines installed. This verification w .....

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e is no evidence of additional employees having been employed to enhance the production, nor is there any evidence of excess wages having been paid to the existing employees. However, it is to be assumed that the factory was continuously running in full and the appellant could have manufactured the finished goods by clandestinely manufacturing the same. The justification given by the adjudicating authority that the aluminum sections could have been manufactured from job workers, is a meek respon .....

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m which further manufacturing of aluminum sections took place. The adjudicating authority has relied upon the evidences of procurement of furnace oil from IOCL/HPCL. The said evidences does not carry the case of the Revenue any further as the furnace oil which was allegedly purchased and unaccounted by the appellant was from IOCL/HPCL. It is common knowledge that IOCL/HPCL effects the delivery of the furnace oil on advance payment and such advance payment has to be made by demand draft. In the f .....

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uthority should have gone into details of the payments made for the purchases of furnace oil recorded in appellant s name and could have come to a conclusion as to who made the payments for the furnace oil which was cleared from IOCL/HPCL and remained unaccounted by the appellant. In the absence of any such information, despite clear direction from the Tribunal, I find it difficult to hold that the furnace oil was procured by the appellants and utilized the same without accounting for in records .....

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l cleared in appellants name, the same cannot be attributed to as unaccounted purchases of appellant. (iii) It is presumption that the appellant had or could have manufactured the aluminum sections from the job workers, is totally without any evidence as adjudicating authority was not able to bring on record as to who were the job workers who manufactured the aluminum sections for the appellant which were clandestinely removed. Secondly, the adjudicating authority has also not produced any evide .....

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plied, becomes a manufacturer and is liable to discharge duty on such finished product. The discharge of duty liability by a job worker is deferred and shifted to a principal who has supplied the raw material, only in the cases where the principal has agreed or filed a declaration to follow the procedure for the purpose of manufacturing the goods in the job workers premises. In the entire case of records, I find that, though the adjudicating authority has based his findings on presumption of man .....

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evidence, this presumption is totally erroneous and cannot be held against the appellant. (iv) It is assumed by the adjudicating authority that the appellants activity of not recording the furnace oil and isolated purchases of aluminum scrap and not accounting the same in books of records, has resulted in manufacturing of aluminum sections, which were clandestinely removed. This is again an assumption without any evidence. It is the findings in the Order-in-Original by the adjudicating authority .....

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turing and clearance of aluminum billets from the appellants factory. The entire show cause notice and annexures thereto proceeds on the ground that the appellant had clandestinely manufactured the aluminum sections and cleared the same without payment of duty. It is also on record that, for manufacturing of aluminum sections from the aluminum billets, only power is consumed for working of dies and moulds, and no further material is consumed. It is demonstrated from the records that the power co .....

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e appellant, does not lead the Revenue s case any further, than to a suspicion that the appellant could have clandestinely manufactured aluminum billets, which is not the charge in proceedings. (v) It is to be assumed that transporters records which were unearthed by the investigating authority indicated that in the booking registers/memos/LRs, many consignments were cleared by the appellant for which there was no corresponding Central Excise documents found in the factory premises of the appell .....

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ent of the goods. It is also seen that all the transporters have in their statements, categorically stated that the goods transported by them from the appellants factory were covered by valid Central Excise invoices and it has not been disputed by the Revenue, nor it is the case of the Revenue that the appellant was issuing duplicate/parallel invoices. It is also to be noted that the transporters were paid by the appellant only way of account payee cheque, which were duly recorded in the books o .....

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l of the goods. It is also to be admitted that there is no presumption under Section 36A regarding truth and accuracy of third party records, in which cases, such transporters are not being jointly tried with the accused, which is a fact in this case. (vi) There is no further investigation as to whom the goods were clandestinely cleared and sold, despite the fact that there was seizure of finished goods from the premises of M/s. Vinviv and M/s. Allied Aluminum on the pretext that the same were c .....

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