2023 (9) TMI 806 - AT - Central Excise

Tribunal dismisses Department appeal, upholds decision on lack of evidence in clandestine removal case.

The Commissioner of Central Excise, Jammu Versus M/s FIL Industries Private Limited (formerly known as Kohinoor Industrial Agro Products)

The appellate tribunal dismissed the Department's appeal, affirming the Commissioner's decision to drop the proceedings. The judgment emphasized the ... Clandestine removal of chemicals - as per the opinion of Sher-E-Kashmir, University of Agricultural Sciences & Technology, Srinagar, the chemicals cannot be used for post-harvest treatment of apples - HELD THAT:- The opinion relied upon by the Department is inconclusive inasmuch as the same certificate which asserts that the said chemicals cannot be used for post-harvest treatment of apples beyond the period of 25 days also mentions that the university has not undertaken any studies regarding the use of such chemicals in the post-harvest scenario. Therefore, the certificate cannot be said to be conclusive. Moreover, the Jammu Centre of the University has certified that the said chemicals can be used for treatments of apples; the Department counters the submissions of the appellants and the opinion of the Jammu Centre of the University merely by stating that as apples are not grown in Jammu, the certificate cannot be relied upon. If the Department did not want to rely upon the technical opinion, the same should have been done by countering technical opinion by expert opinion authoritatively countering the opinion given. This having not been attempted or done, the Department cannot brush aside the technical opinion as per the whims and fancies or even for Revenue considerations - It is found that learned Commissioner has, categorically, observed that the Jammu unit of the university have given opinion at the instance of the Department only and the Department cannot be selective in using the reports. Clandestine removal - HELD THAT:- There are no attempt has been made by the Department to ascertain the stock available and the stock consumed. Though, it has been alleged that the respondents have cleared the stock of inputs clandestinely, no investigation, whatsoever, appears to have taken place in this regard to ascertain the purchasers, the transportation and the receipt of such sale - the learned Commissioner observed that no evidence was put on record to substantiate the said allegations; the show-cause notice is silent on important issues like from where the job work was done, to whom and how these chemicals were sent; onward movement and return of formulations and there is no evidence on the purported use of the formulations in any of the orchards. Therefore, the Department has not made any case of clandestine removal against the appellants. The learned Commissioner has gone through the issue raised in the show-cause notice and the submissions of the appellants and has given a considered and reasoned opinion on the basis of available evidence on record. The Department has not brought out any cogent reason, whatsoever so as to negate the findings of the learned Commissioner. Under the circumstances, no case has been made out against the impugned order. The impugned order is sustainable and requires no interference - Appeal of Revenue dismissed. Issues:The issues involved in the judgment are denial of permission to clear imported chemicals, allegation of clandestine removal without duty payment, reliance on technical opinions regarding usage of chemicals for post-harvest treatment of apples, and lack of evidence supporting the allegations.Permission to Clear Imported Chemicals:The appellant, an EOU engaged in manufacturing and exporting Apple Concentrate, imported chemicals for processing but was denied permission by the Department to clear them for processing by a job worker. The Department alleged that the goods were not usable for post-harvest activity, leading to a show-cause notice and subsequent proceedings.Allegation of Clandestine Removal:The Department claimed that the imported chemicals were removed clandestinely without payment of duty. However, the appellant argued that there was no evidence of such removal, no discrepancy in stock was found during inspections, and no proof was provided regarding the alleged clandestine removal.Reliance on Technical Opinions:The case involved conflicting technical opinions regarding the usage of the chemicals for post-harvest treatment of apples. While one opinion suggested limitations on usage, other certificates and expert evidence supported the feasibility of using the chemicals for such treatment. The Department's reliance on certain opinions was questioned, emphasizing the need for authoritative counter-opinions if disputing technical views.Lack of Supporting Evidence:The judgment highlighted the lack of concrete evidence supporting the Department's allegations. It was noted that no stock verification was conducted, no investigation into alleged clandestine removal took place, and important details such as transportation and usage of the chemicals were not substantiated. The Commissioner's decision to drop the proceedings was upheld due to the absence of substantial evidence against the appellants.Conclusion:The appellate tribunal dismissed the Department's appeal, affirming the Commissioner's decision to drop the proceedings. The judgment emphasized the importance of substantiated evidence in allegations of clandestine removal and the necessity for authoritative counter-opinions in technical disputes. The lack of concrete evidence and failure to establish a case of clandestine removal led to the dismissal of the appeal.