2018 (10) TMI 467 - AT - Central Excise

Tribunal rules in favor of exporter in Central Excise Duty case

The Tribunal ruled in favor of the appellant, a 100% Export Oriented Undertaking, in a Central Excise Duty case concerning the diversion of 2400 MT of Pig ... Clandestine removal - clearance of consignments with an intent to evade duty - Revenue’s view is that the clearance of the goods vide the two invoices are in addition to the goods diverted from Paradip Port. Held that:- It is surprising to note that the allegation of diversion of 2400 MT of Pig Iron has been made by Revenue without any supporting documents. There is nothing on record to indicate that the consignee M/s. MJR Steel Pvt. Ltd. has received total 4800 MT as against 2400 MT covered by the two invoices. Revenue has also not procured any documentary evidence for transport of the enormous quantity of 2400 MT of Pig Iron alleged to have been made in addition to the stock moved through Rail - the credit entry made in the RG-1 on 26/07/2006 for an additional 2400 MT and subsequent debit can at best raise a suspicion. Demand not justified - appeal allowed - decided in favor of appellant. Issues:- Central Excise Duty demand for diversion of 2400 MT of Pig Iron from export to DTA sale- Allegation of clearance of additional 2400 MT of Pig Iron without proper documentation- Justification of duty demand and supporting evidence by Revenue- Appeal against the Order-in-Original regarding Central Excise Duty demand and penaltiesAnalysis:1. The appeal pertains to the diversion of 2400 MT of Pig Iron from export to Domestic Tariff Area (DTA) sale by the appellant, a 100% Export Oriented Undertaking. The appellant sought permission for this diversion from the Assistant Commissioner and paid the duty on the goods diverted. However, the Revenue alleged that the appellant cleared an additional 2400 MT without proper documentation.2. The Revenue issued a Show Cause Notice demanding Central Excise Duty amounting to &8377; 88,38,167/- along with interest and penalties for the diversion of 2400 MT. The Adjudicating Authority upheld the duty demand and imposed a redemption fine. The appellant challenged this order, arguing that only 2400 MT was diverted with proper documentation and duty payment.3. The appellant's advocate contended that the credit entry in the RG-1 Register was made solely for the diverted consignment covered by two invoices. They highlighted the lack of evidence from the Revenue regarding the alleged clearance of an additional 2400 MT. The appellant emphasized that no supporting documents were provided to prove the receipt of the total 4800 MT by the consignee.4. During the hearing, the Revenue justified the duty demand based on the Adjudicating Authority's findings that the 2400 MT diverted from Paradip Port was not transported back to the factory, indicating an additional clearance of 2400 MT. However, the Tribunal found that the duty demand was unjustified as there was no concrete evidence or documentation supporting the Revenue's allegation of the clearance of an extra 2400 MT.5. After considering the arguments and examining the appeal record, the Tribunal concluded that the duty demand for the alleged clearance of 2400 MT of Pig Iron without proper documentation was unfounded. The Tribunal set aside the Order-in-Original and allowed the appeal in favor of the appellant.6. In the absence of substantial evidence supporting the Revenue's claim of additional clearance, the Tribunal found the duty demand unjustified and ruled in favor of the appellant, emphasizing the importance of proper documentation and evidence in such cases.