TMI Blog2016 (1) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... rious other inputs which are required for manufacturing of M.S. Ingots were also procured clandestinely and were unaccounted. Secondly, the allegations of clandestine removal of manufactured goods is very serious allegation and needs to be substantiated by Revenue authorities with tenable evidence to show that there was large scale manufacturing of commodities. As regards the demands confirmed by the adjudicating authority in respect of shortage of goods, learned Counsel fairly submits that they are not contesting the issue but submits that penalty imposed be set aside. In view of the foregoing, we hold that except for the confirmation of demand on the shortages as noticed by the adjudicating authority we set aside the impugned order confirming the demands raised on the appellant as regards clandestine removal of finished goods. As we have set aside the demands raised, we find that there is no reason to visit the appellants with any penalty. Decided substantially in favor of assessee. - Appeal No. E/1728, 1729/10, 86420, 86421/13 - Final Order Nos. A/4002-4005/2015-WZB/EB - Dated:- 31-12-2015 - Mr. M.V. Ravindran, Member (Judicial) And Mr. C.J. Mathew, Member (Techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the demands raised in respect of the shortage of raw materials are incorrect as has been held by the following decisions:- (a) CCE v. Pentagon Steel Pvt. Ltd. - 2013 (288) ELT 271 (Tri.) (b) Ratan Industries Pvt. Ltd. - 2013 (290) ELT 443 (Tri.) (c) Raj Ratan Industries Ltd. - 2013 (289) ELT 482 (Tri.) (d) Atco Industries Ltd. v. CCE - 2013 (291) ELT 273 (Tri.) 4.1 It is his further submission that the demands raised for the differential duty on the allegation of clandestine removal of the goods during the period 24.03.2005 to 18.6.2008 in one show-cause notice and in another show-cause notice for the period July 2008 to November 2010 is based upon the imaginary electricity consumption @ 1046 units metric tonne. It is his submission that this calculation is considered by the lower authorities based upon the report of one Dr. N.K. Batra, Professor, IIT Kanpur. It is his submission that there is no other evidence brought on record as to clandestine manufacturing and clearing of the said M.S. Ingots but the reliance based on non-existing report of Dr. N.K. Batra. It is his submission that the Tribunal had quashed the demands on this ground as they are ima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Courts and the Tribunal ruling that the allegations of clandestine removal cannot be sustained merely on assumption and presumption basis and should be supported by positive evidence. It is his submission that the reliance placed on the 3rd party can be considered by the adjudicating authority subject to they have been presented to cross-examination. He would submit that he relies upon the judgement in the case of CCE v. Brims Products - 2011 (271) ELT 184 Pat. HC, Union of India v. MSS Foods Ltd. 2011 (264) ELT 165 M.P and CCE v. Vishwa Pvt. Ltd. 2013 (287) ELT 243 (Guj.) for the proposition that clandestine removal has to be brought on record by the positive and conclusive evidence that there was an additional production (which is unaccounted) of clandestine removal of excisable goods. It is his further submission that the judgement of the Honble Gujarat High Court in the case of Vishwa Traders Pvt. Ltd. (supra) specifically records that the department must have positive evidence that the manufacturer has clandestinely procured the raw material required to manufacture the final product, a fact which is absent in the case in hand. It is his further submission that there b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccounted manufactured goods without payment of duty. This statement was followed by various statements dated 26.02.2009, 08.09.2009 and 06.04.2009 and these statements were not retracted and only in reply to show-cause notice dated 23.04.2010 it is stated that the statements were incorrect as they were recorded in English and Shri Chatar Singh does not understand English hence it stands retracted. It is his further submission that the main appellant did not maintain any record of receipt of raw material or transportation of finished goods; no separate record in Form IV was maintained for procurement of bazaar scrap and Cenvated raw material. It is his submission that leave alone the statutory records, the main appellant not even maintained any records of bazaar scrap and there was no record of maintenance of heat wise manufacture of finished goods. There are no records such as Bilty, consignment note, delivery challan, weighment slip or payment particulars for procurement of raw material or despatch of finished goods. It is his further submission that the statements of Shri Shardulchand Patyela, Manager and Authorised Signatory, Shri Bhagwandas Karmali Shri Sikandar Yadav, Melt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when production commenced. He would submit that the capacity to manufacture ingots, electricity consumption during the period was available and the calculation thereof indicates that there was clandestine removal of the finished goods. It is his submission that the Apex Court in the case of CCE v. Fiat India Pvt. Ltd. - 2012 (283) ELT 161 (SC) (Para 43) and Om Prakash Bhatia - 2003 (155) ELT 423 (SC) (Para 19) held that a prudent business person will not sell or buy at a loss and especially over a period of time reasoning which will apply in the case in hand. It is his submission that the show-cause notices dated 11.09.2009 and 11.02.2011 and orders-in-original dated 18.05.2010 and 19.03.2012 have laid out the case and needs to be sustain as held in the following cases:- 1. Kanungo Co 1983 (13) EL T 1486 (SC) 2. C.C Vs D. Bhoormull1983 (13) ELT 1546 (SC) 3. Triveni Rubber and Plastics Vs CCE 1994 (73) EL T 7 (SC) 4. Nagpal Steel Ltd. Vs CCE 2000 (125) ELT 1147 (T) 5. Hans Casting Pvt Ltd. Vs CCE 1998 (102) EL T 139 (T) 6. Bajrang Petro Chemicals (P) Ltd. Vs CCE 2015 (317) EL T 243 (All) 7. Gulabchand Silk Mills Pvt Ltd. Vs CCE 2005 (184) EL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d additional raw material from M/s. Sidhbali which was unaccounted but we find that the said allegation is not supporting the case when various personnel of the main appellant were confronted with such statement of M/s. Sidhbali, stated that they have not received the goods from M/s. Sidhbali. Further, we find that sponge iron is not the only input required for the manufacture of M.S .Ingots, Revenue has not brought on records to show that various other inputs which are required for manufacturing of M.S. Ingots were also procured clandestinely and were unaccounted. The main raw material for manufacturing of M.S. Ingots is electricity which is used in induction of furnace. Revenues case is that, based upon the report of Dr. N.K. Batra, appellant had consumed more electricity but recorded less production. The allegation of clandestine removal cannot be sustained on a report which was non-existent as was stated by IIT, Kanpur during a query raised in RTI to them is recorded in many orders of this Tribunal in an identical set of issues. Heavy reliance placed by the adjudicating authority on the said report to presumably to work out the manufacturing of M.S. Ingots and clandestine remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elying upon the very same judgement of R.A. Casting (supra) in an identical issue; as also in the case of M/s. Charu Steels Ltd. and Ors. in final order No.53910-53915/2014-Ex(Br) dated 14.10.2014. On the face of such decided cases on the very same issue, we find that all the arguments put forth by the learned Commissioner (A.R.) are of no consequence and does not carry the case of Revenue any further. 7.3 Secondly, the allegations of clandestine removal of manufactured goods is very serious allegation and needs to be substantiated by Revenue authorities with tenable evidence to show that there was large scale manufacturing of commodities. In the case of Viswa Traders Pvt. Ltd. supra, the Hon'ble High Court of Gujarat has held as under:- 7. The Tribunal in Paragraph Nos. 12, 13 and 16 has recorded clear finding that when the premises of the respondent were visited, the stock of raw-material and finished goods were tallying with the recorded goods. Further, nothing on record was found by the authority, which showed that unrecorded raw-materials were purchased or consumed by the respondent or that the respondent had clandestinely manufactured or removed the goods. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M/s. VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so. We find that the Hon'ble High Court of Delhi in the case of Flevel International in Central Excise Appeal No.6/2013, in their judgement dated 17.09.2015 has upheld the law concerning with clandestine removal as decided by this Tribunal in the case of Arya Fibres Pvt. Ltd. v. CCE, Ahmedabad-II -2014 (311) ELT 529 (Tri. Ahmd.) which is in Para 55 of the unreported judgement and we reproduce the same:- (e) Hari Shanker, learned Senior counsel for the Appellant, has also drawn the attention of the Court to a decision of the CESTAT in Arya Fibres Pvt. Ltd. v. CCE, Ahmedabad-II 2014 (311) ELT 529 (Tri.-Ahmd.) where the entire law concerning clandestine removal has been discussed and the legal position has been summarised as under: (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of: (a) raw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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