2014 (2) TMI 1012 - AT - Central Excise

Tribunal upholds decision to set aside demands and penalties, except for marginal amount.

COMMISSIONER OF CENTRAL EXCISE, SURAT Versus SAVLA CHEMICALS LTD.

COMMISSIONER OF CENTRAL EXCISE, SURAT Versus SAVLA CHEMICALS LTD. - 2014 (299) E.L.T. 65 (Tri. - Ahmd.) Issues Involved:1. Denial of Cenvat credit on inputs received short.2. Confirmation of demand of duty on charges of clandestine removal.3. Imposition of penalties on the main assessee and individuals.Issue-wise Detailed Analysis:1. Denial of Cenvat Credit on Inputs Received Short:The Revenue appealed against the first appellate authority's decision, which had set aside the demand for Cenvat credit on inputs received short, except for Rs. 38,250/-. The appellate tribunal noted that the assessee had also appealed against the confirmation of this demand, and the tribunal had previously ruled in favor of the assessee, stating that 'the loss of the inputs being marginal, the Cenvat credit should not be denied to an assessee.' Therefore, the tribunal upheld the first appellate authority's decision and rejected the Revenue's appeal on this point.2. Confirmation of Demand of Duty on Charges of Clandestine Removal:The Revenue argued that the first appellate authority erred in not considering the confessional statements of senior personnel of the respondent-assessee and in setting aside the demands raised due to short receipt of inputs. The tribunal reviewed the records and found that the first appellate authority had determined that the finished goods analysis register, maintained for ISO standards, was not a dependable record to establish clandestine removal without corroborative evidence. The tribunal noted that 'there is no co-relation between the consumption of raw materials, actual finished goods manufactured, and cleared.' Additionally, statements from the respondent's customers confirmed that they had not received any goods without payment of duty. The tribunal emphasized that the Revenue failed to provide corroborative evidence to support the allegations of clandestine removal. Consequently, the tribunal upheld the first appellate authority's findings that there was no evidence of clandestine removal and rejected the Revenue's appeal on this issue.3. Imposition of Penalties on the Main Assessee and Individuals:The Revenue contended that the penalties imposed on the main assessee and individuals should not have been set aside by the first appellate authority. However, the tribunal found that the statements of the respondent's customers and the cross-examination of Shri Subhash Solanki, who retracted his original statement, indicated that there was no clandestine removal of goods. The adjudicating authority had also noted the lack of corroborative evidence from the buyers' end. As the Revenue's appeal against the main assessee failed, the tribunal concluded that the appeals regarding the penalties on the individuals also failed. Therefore, the tribunal upheld the first appellate authority's decision to set aside the penalties.Conclusion:The tribunal rejected the Revenue's appeals on all issues, affirming the first appellate authority's decision to set aside the demands and penalties, except for the marginal amount of Rs. 38,250/-. The tribunal concluded that the Revenue failed to provide sufficient evidence to support the charges of clandestine removal and the denial of Cenvat credit.