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of <h1>Tribunal Overturns Excise Demand for Varsana Ispat Ltd - Key Ruling on Clandestine Removal</h1> <h3>M/s. Varsana Ispat Ltd and M/s. Kunal Bubna Versus C.C.E. & S.T. -Rajkot</h3> M/s. Varsana Ispat Ltd and M/s. Kunal Bubna Versus C.C.E. & S.T. -Rajkot - TMI Issues:Confirmation of demand of Central Excise, interest, and imposition of penalty under Section 11AC of Central Excise Act, 1944 read with Section 25 of the Central Excise Act, 2005 based on shortage of TMT bars in stock taking.Analysis:1. Confirmation of Demand and Penalty:The appeal filed by M/s. Varsana Ispat Ltd (VIL) and Shri. Kunal Bubna, General Manager, was against the confirmation of demand, interest, and penalty under relevant sections due to a shortage of 12mm TMT bars in the stock. The discrepancy arose from the recording of manufactured quantity without proper weighment. Shri. Kunal Bubna admitted the shortage but attributed it to approximate weight recording errors. The Additional Commissioner initially dropped the proceedings, citing lack of evidence of clandestine removal and the appellants' compliance with Notification No. 39/2001-CE. However, the Revenue challenged this decision before the Commissioner (Appeals).2. Allegations of Clandestine Removal:The Commissioner (Appeals) upheld the charge of clandestine removal based on the discrepancy in stock, rejecting the appellant's contentions regarding the insignificant percentage of shortage and lack of TMT bars production in the past year. The Commissioner relied on specific case laws to support the charge, emphasizing the appellant's failure to explain the shortage adequately during verification.3. Appellant's Arguments and Legal Precedents:The appellant's counsel referred to similar cases where demands were dropped under comparable circumstances, citing precedents like Rashtriya Ispat Nigam Ltd. and Widia India Ltd. The counsel argued that the charge of clandestine removal was unsustainable given the circumstances and legal precedents.4. Tribunal's Decision and Legal Rationale:Upon review, the Tribunal found that the charge of clandestine removal was not substantiated, as the discrepancy in stock was minimal (0.31% of total production) and the appellants did not benefit from evading duty due to their entitlement to claim refunds under Notification No. 39/2001-CE. The Tribunal highlighted the lack of positive evidence supporting clandestine removal and referenced previous decisions to support its ruling, emphasizing the negligible nature of the shortage and the absence of any gain from evasion.5. Final Verdict and Conclusion:Ultimately, the Tribunal set aside the demand, interest, and penalty, allowing the appeals on the grounds that the charge of clandestine removal was not sustainable given the circumstances and legal precedents cited. The decision was pronounced on 01.11.2019 by the Tribunal.This detailed analysis covers the issues raised in the legal judgment concerning the confirmation of demand, allegations of clandestine removal, legal arguments presented, the Tribunal's decision, and the final verdict.
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