Statement of Authorised Representative cannot prove clandestine removal when there is no variance in raw material stock.

PJ/Case Laws/2012-13/1530

Case:-RAJ RATAN INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, KANPURE

Citation:- 2013(289) E.T.L. 483(Tri.- Del.)

Brief Facts:-As per facts on record M/s. Raj Ratan Industries Ltd. is engaged in the manufacture of M.S. Ingots. Their factory was visited by the Central Excise officers on 26-8-2008, who conducted various checks and verification. As a result shortage of M.S. Ingots to the extent of 40.865 M.T., involving duty of Rs. 1,50,265/- was detected. However no discrepancy was found in the stock of raw-materials.
Shri Vijay Kumar Agarwal authorized signatory of the said appellant in his on the spot statement admitted shortages and agreed to pay duty which was also deposited by him, that the short found final product might have been disposed by their factory employees without issuing invoices and without payment of duty.
On the above basis, proceeding were initiated against the appellant by way of show cause notice dated 1-6-2009. The said show cause notice culminated into an order passed by the original adjudicating authority confirming the demand and interest and imposition of identical amount of penalty under Section 11AC of the Central Excise Act, 1944. Further, penalty of Rs. 50,000/- was imposed upon Shri Vijay Kumar Agarwal in terms of Rule 26 of Central Excise Rules. Appeal against the above order did not succeed before Commissioner (Appeals). Hence, the present appeal.

Reasoning of Judgment:-We have considered the submission from both parties and perused the record and on going through the impugned order it is found that the duty demand stands confirmed in respect of shortages detected at the time of visit of the officers read with the statement of Shri Vijay Kumar Agarwal. The appellants have strongly contended, the manner of weightment of the final product. It is seen that the Revenue has not produced any inventory on record to show that the weightment was actually done and the shortages were not on the basis of average weight system but real and based upon actual weightments. Similarly reliance of the Revenue on the statement of the authorized representative cannot ipso-facto lead to the inevitable conclusion of clandestine removal of final product especially when there is no variation in the stock of the raw-material. There is no other evidence on record to reflect upon the above fact. Hon'ble Delhi High Court in the case of Commissioner of Income Tax v. Dhingra Metal Works, 2010- TIOL-693-HC-DEL-IT has held that though an admission is extremely important piece of evidence, it cannot be said to be conclusive.
It is well settled law that allegations of clandestine removal are required to be established by the Revenue by production of the concrete and tangible evidence. In the present case apart from the statement of the authorized representative, there is no evidence to reflect upon the said activities. Reference at this point can be made to the Tribunal decision in the case of Vikram Cement (Final order no.)A/1419-1421/ 2012-S.M [BR} dated 4-10-2012. and Punjab & Haryana High Court judgment in the case of CCE v. Lexmi Engineering Works, 2010 (254) E.L.T. 205 (P&H). As the Revenue has failed to bring on record any evidence showing illegal manufacture and removal of their final product, Tribunal find no justification in upholding the confirmation of demand of duty or imposition if penalty on both the appellants.
Accordingly, the impugned orders are set aside and both the appeals are allowed with consequential relief to the appellant.

Decision:-The appeal is allowed.

Comment:-The substance of this case is that allegation of illicit manufacture and clandestine removal are to be backed by corroborative evidences and the statement of authorised representative cannot be the sole basis of confirming such demand along with interest and penalty specially when there is no variance in raw material stock.

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PJ/Case Laws/2012-13/1530

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