TMI Blog2018 (10) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... legation nor evidence of removal of goods, without payment of duty. It is well settled law that duty of excise is to be paid at the time of removal of goods as held by the Hon’ble High Court of Gujarat in the case of Asstt. ACIT Vs. Narmada Chematurpetrochem Ltd., [2010 (8) TMI 263 - GUJARAT HIGH COURT], wherein it was held that mere production or manufacturing of goods by itself is not sufficient to demand duty of excise. The Hon’ble Court has held that liability to pay excise duty arise only when both events namely manufacturing of excisable goods and removal of such goods, takes place. With respect to demand of ₹ 23,61,452/- - Held that:- There is no corroborative evidence relied upon by the department. Despite the name of the customers, truck no. & other details mentioned in the private records, no attempt has been made to investigate the matter at the end of the buyers, transporters, etc. In the present case, there is no evidence of excess purchase of raw material, transportation thereof, sale of finished goods, realization of sale proceeds, excess power consumption, transportation of finished goods - during search no goods were found in excess or short - Hon’ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kept at page no. 101 to 145 and 151 to 159, it revealed that the said reports are for the period 17.11.1008 to 07.12.2008 and 09.12.2008 to 12.12.2008, the same are showing kiln wise consumption of raw material and production of sponge iron with the remarks- difficulty faced during the shifts of the day. Upon comparison with Daily Stock Account, it appears that the appellant had suppressed production of 440 MT of sponge iron. The above suppression of production further gets corroborated from the Process Log Sheets maintained by the appellant. The department have relied upon the statement of Shri Shyam Sunder Ahirwal-Assistant Process Manager, wherein he has submitted that said process log sheets and daily production reports have been maintained in their factory premises. He further stated that average feed rate of iron ore in Kiln No. 1 is 6MT/hr and in Kiln No. 2 is 9.5 MT/hr and the maximum feed rate of iron ore is 11.5 MT/hr. Therefore, depending upon the quality of iron ore, the yield of sponge iron ranges in between 50 to 60% of the total iron ore fed into the kiln. Upon comparison with the daily stock account, it appeared that appellant suppressed production of 46 MT. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,79,702/- involving Central Excise Duty of ₹ 85,77,991/- and clandestinely removed 912.070 MT of sponge iron valued at ₹ 1,63,14,716/- involving Central Excise duty of ₹ 23,61,532. Accordingly, the show cause notice was issued to the appellant proposing demand of ₹ 1,09,39,523/- under Section 11A along with interest and penalty and with respect to the other appellants, penalty was proposed under Rule 26 of the Central Excise Rules, 2002. 5. This is the second round of litigation before this Tribunal. Earlier The said show cause notice was adjudicated by the learned Commissioner, who vide ex-parte order dated 23.06.2010 confirmed the duty demand along with penalties imposed on the appellants. The said order was challenged by the appellants before this Tribunal, whereby vide Final order dated 19.12.2011, this Tribunal after setting aside the order, remanded the matter to the learned Commissioner for de-novo adjudication, however, directed the appellant to pay ₹ 30 Lakhs as pre-deposit within a period of eight weeks. The appellant, being aggrieved, with the condition to pay ₹ 30 Lakhs, challenged it before Hon ble High Court of Chhattisgarh. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner failed to appreciate the fact that the physical stock of goods- raw material and finished goods almost matches with the book records. The demand have been confirmed on the basis of assumptions and presumptions. Unless there is clinching evidence of purchase of raw material, use of electricity, the mode of financial flow back of funds, charge of clandestine removal is not substantiated and is fit to be set-aside. Suspicion howsoever strong cannot take place of positive evidence which is required for proving a charge of clandestine removal. Further under the law it is the onus of the revenue to establish evasion of duty as alleged, by leading evidence. 8. That in the present case the Department have drawn an inference of excess production mainly on the basis of discrepancy between the private records and daily stock account, disregarding the burden of proof required to be discharged by it. Such inference being solely based on assumption and presumption without any independent positive evidence in the nature of procurement of inputs from other sources, actual production and clearance of suppressed production, financial flow back, evidence of related parties like buyers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ports to the management showing kiln wise consumption of raw material and production of sponge iron, with the remarks of difficulties faced during the shift of the day, if any. The Ld. AR further observed that the contention of the appellant that the Daily production reports only is for the purpose of use of management for control over the conversion process and performance of the kiln, so as to get optimum yield, but were not reflective of the actual production of sponge iron, was disbelieved. The Ld. Commissioner observing that it goes beyond his comprehension as to how the appellant intends to bring home their contentions that the production process is controlled by their production personnel on the basis of speculative production report prepared for each day. It was further observed that the authenticity of the process log sheets showing consumption of raw material and kiln operation details establish that the same were recovered/withdrawn from the factory premises of the appellant. 12. Ld Commissioner also relied on the statement of Mr. Sharma the process manager who had deposed that he had been looking after the overall manufacturing process including the feeding of raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 2008 and 4 July 2008, the recorded production was actually on higher side. 16. Having considered the rival contentions, we find that as per Panchanama, during search, on physical verification of goods by the officers of central excise, no excess or shortage of either finished goods or raw materials were found. Further, we find that on some of the occasions the production of sponge iron is more recorded in daily stock account (RG-1) as compared to the private records, relied upon by the department. This raises serious doubt about the actual production of sponge iron mentioned in private record. We agree with the learned counsel for the appellant that private record does not show actual figure of production. We further find that with respect to demand of ₹ 85,77,991/- there is neither allegation nor evidence of removal of goods, without payment of duty. It is well settled law that duty of excise is to be paid at the time of removal of goods as held by the Hon ble High Court of Gujarat in the case of Asstt. ACIT Vs. Narmada Chematurpetrochem Ltd., 2012 (278) ELT 178 (Guj.),wherein it was held that mere production or manufacturing of goods by itself is not sufficient to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the Hon ble High Court held that assumptions and presumptions cannot take place of positive legal evidence which is required for proving the charge. We also find that the Hon ble High Court of Delhi in the case of Flevel International Vs. CCE, (supra) held as follows:- 50. The Court also finds that no attempt has been made to undertake any serious investigation even as regards the details furnished by the appellant or those gathered in the course of investigation. In cases of clandestine removal a certain standard is expected of the Department before a finding can be reached against an assessee. In Oudh Sugar Mills Ltd. v. Union of India - 1978 (2) E.L.T. (J172) (S.C.), the Supreme Court pointed out that the inference drawn by the authorities only on the basis of the entries in the ledgers would be insufficient. It was pointed out that in the factory where the turnover was considerable and the operations conducted involved a human element in a significant way it would not be right to base the conclusions only on surmises. 18. We find that in the present case, there is no positive evidence brought on record by the revenue to alleged suppression of production/clande ..... X X X X Extracts X X X X X X X X Extracts X X X X
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