2015 (6) TMI 189 - AT - Central Excise

Tribunal Questions Data Reliability in Duty Demand Case, Grants Waiver & Stay

The Tribunal found that the data retrieved from electronic devices was unreliable, leading to doubts about the duty demand against M/s Tarun Alloys Ltd. ... Imposition of interest and penalty - Clandestine removal of goods - Held that:- Commissioner while adjudicating the matter against KIL has held that the CPU/pen drive data is not reliable and on this basis had dropped the entire demand based on such data retrieved from CPUs Pen Drives and Laptops. - Out of the total duty demand of ₹ 95,85,397/- at least the demand of about ₹ 35 lakh may be sustainable - Here also the duty demand is based only on the entries in the purchase files maintained by the employees of KIL which had been recovered from their premises and prima facie, we do not find any other evidence of unaccounted purchase of raw material or evidence of clandestine removal by the appellant. - amount already deposited by the appellant during investigation is sufficient for hearing of their appeal and the requirement of pre-deposit of the duty demand, interest and penalty by the appellant company and the requirement of pre-deposit of penalty - Stay granted. Issues:Alleged duty evasion on clearance of MS Ingots without central excise invoices; Reliability of data retrieved from CPUs, Pen Drives, and Laptops; Prima facie case in favor of the appellant; Pre-deposit requirements for hearing the appeals; Stay application decision.Analysis:The case involved M/s Tarun Alloys Ltd., accused of clandestinely clearing 2145 MT of MS Ingots to another company without issuing central excise invoices, resulting in a duty demand of Rs. 95,83,397. The Commissioner confirmed the duty demand and imposed penalties on the appellant company and its director. The appellant argued that the data retrieved from CPUs, Pen Drives, and Laptops was unreliable, citing a previous case where a similar data source was deemed unreliable. The appellant claimed a prima facie case in their favor, stating lack of evidence of duty evasion. The appellant requested a waiver of pre-deposit requirements for hearing the appeals and a stay on recovery.During the hearing, the appellant's counsel contended that a significant portion of the duty demand was based on unreliable data retrieved from electronic devices, and the Commissioner had not considered the cum-duty benefit. The appellant argued that the evidence against them was insufficient, with no proof of unaccounted procurement or clandestine removal. The respondent opposed the stay application, emphasizing the evidence from the recovered devices and the director's statement admitting possible duty evasion.After considering both sides' submissions and examining the records, the Tribunal found that the data retrieved from CPUs, Pen Drives, and Laptops was not reliable, as established in a previous case involving a similar situation. The Tribunal concluded that a significant portion of the duty demand may not be sustainable based on the unreliable data. Prima facie, the Tribunal did not find evidence of duty evasion apart from entries in purchase files recovered from the other company's premises. Consequently, the Tribunal waived the pre-deposit requirements for hearing the appeals and stayed the recovery process, as the amount already deposited during investigation was deemed sufficient. The stay applications were thus disposed of accordingly.