2018 (1) TMI 371 - AT - Central Excise

Tribunal overturns duty demand on Soya Oil refinery due to lack of evidence

The Tribunal set aside the adjudication order against the refinery, finding insufficient evidence to support the demand for unpaid Central Excise duty on ... Clandestine removal - it was alleged that the assessee-appellant had procured 2424.875 Mt of Soya Crude Oil, but had not accounted for the same in the statutory records - demand on 15.08 MT of Crude Soya Oil alleged to have been procured from M/s Sonic Bio-chem through M/s. Sheetal Enterprises - denial of cross-examination - Held that: - no corroborative evidence except statement has been brought on record. The Appellant also requested for cross examination of Shri Vineet Agarwal, who in spite of several notices to appear for cross examination, did not appear. Thus, in absence of his cross examination, the statement furnished by him cannot be relied upon. There is no evidence of consideration received by said brokerage firm towards sale of goods to the Appellant No.1 unit. Demand on the basis of 15.080 MT of Crude oil allegedly procured by Appellant No.1 from M/s. Sonic Biochem through M/s. Sheetal Enterprise - Held that: - there is no evidence of Appellant No. 1 having received such goods. There is no evidence of transportation of goods to Appellant’s Unit or its consumption in Refined Oil nor any instance of production of Refined Soya Oil and removal of same without payment of duty or any buyer - no demand can be made in absence of any of such evidence. The demands made against the Appellant No.1 and penalties imposed upon Appellant No. 1 and 2 are not sustainable and are required to be set aside - appeal allowed - decided in favor of appellant. Issues:Appeal against adjudication order dated 31.03.2008 passed by the Commissioner (Appeals), Central Excise, Bhopal.Analysis:1. The case involved the assessee-appellant, a refinery registered under the Central Excise Department, accused of not accounting for 2424.875 MT of Soya Crude Oil in statutory records, leading to the manufacture and removal of Refined Soya Oil without paying Central Excise duty. The Department initiated show cause proceedings resulting in a confirmed duty demand of Rs. 24,65,831/-, interest, and penalties. Additionally, a penalty of Rs. 1,00,000/- was imposed on an individual.2. Both the appellants appealed against the adjudication order, challenging the demand made based on third-party records without sufficient evidence of receipt or removal of goods clandestinely. The appellants argued that the demand should be supported by corroborative evidence of purchase, manufacture, and clearance of Refined Soya Oil. They contested the reliance on third-party documents and records for making the demand.3. The advocate for the appellants disputed the demand on 324.15 MT of Crude Soya Oil, emphasizing the lack of concrete evidence supporting the claim. They argued that the Revenue failed to prove the receipt and processing of the alleged quantities of Crude Soya Oil, highlighting discrepancies in the statements obtained during the investigation.4. The Tribunal considered the arguments presented by both sides and scrutinized the records. It noted that the demand was primarily based on entries in the Brokerage Register, with statements from involved parties. However, the Tribunal found discrepancies and lack of direct physical evidence to support the allegations of clandestine removal of goods without payment of duty.5. After a thorough analysis, the Tribunal concluded that the demands made against the appellants and the penalties imposed were not sustainable. The impugned order was set aside, and both appeals were allowed in favor of the appellants, with consequential reliefs as per the law.This detailed analysis of the judgment highlights the key arguments, evidence considerations, and the ultimate decision made by the Tribunal in favor of the appellants.