2023 (11) TMI 470 - AT - Central Excise

Clandestine manufacture allegations dismissed due to lack of credible evidence beyond disputed notebook entries

M/s. M.J. Steel Re-Rolling Mill Versus The Commissioner of Central Excise (Appeals-II) And BM Mastana, Partner M/s. M.J. Steel Re-Rolling Mill Versus The Commissioner of Central Excise (Appeals-II) And Sri Jeevan Prakash, Partner M/s. M.J. Steel Re-Rolling Mill Versus The Commissioner of Central Excise (Appeals-II)

CESTAT Bangalore held that clandestine manufacture and clearance allegations against the appellant lacked credible evidence. The department relied solely ... Clandestine manufacture and clearance - SSI Exemption - threshold limit of goods cleared - appellant have disputed that except the documents retrieved from Shri Bharat Yadav who joined in July 2006, there is no tangible, corroborative and independent evidence pointing out manufacture and clearance of the finished goods - HELD THAT:- The department on the basis of two pages notebook retrieved from the personal possession of Shri Bharat Yadav containing alleged details of purchase of raw materials during June & July 2006, as authentic, even though the same was later disputed by the partner of the appellant Shri Jeeva Prakash. The said notebook is enclosed at pages 127 to 130 of the appeal paper book. On going through the same we find that except some entries in a tabular form, there is no indication about description of the material and any other particulars indicating that the entries were inputs/raw materials received and used in the manufacture of finished goods. On going through the statement, it is found that though he accepted that the said two pages recovered from his possession but the entries therein were not written by them but by one Shri Anand. No further investigation was carried out by confirming the said facts from Shri Anand nor any attempt was made in this regard by issuing summons to Shri Anand. Also reading the statement of the partner Shri Jeeva Prakash dt. 19.9.2006, we find that he has categorically denied the authenticity of the said documents and also the veracity statement of Shri Bharat Yadav relating to the entries for period for the period prior to his joining the Unit in July 2006. Under these circumstance, the very basis on which the case of clandestine removal has been alleged by the Revenue against the appellant seems to rest not on any credible piece of evidence. The basis of consumption of electricity adopted unilaterally in calculating the manufacture and clearance of finished goods without verification of the same during investigation from the supervisor or the partner, or through any corroborative evidence, cannot be considered as basis for demanding duty on alleged clandestine removal of the goods. The appellants on the contrary placed the audited balance sheet for the year 2006-07 duly certified by the Chartered Accountant establishing the total turnover during the period which did not exceed Rs.100 lakhs. No contrary evidence has been produced by Revenue. There are no merit in the impugned order - the impugned orders are set aside - appeal allowed. Issues involved:The issues involved in this case are related to the clandestine clearance of goods without payment of duty, exceeding the SSI exemption limit, imposition of personal penalties on partners, and the authenticity of evidence presented by the Revenue.Clandestine Clearance of Goods without Payment of Duty:The appellants, engaged in manufacturing TOR Steel, availed SSI exemption under Notification No.8/2003-CE but were found to have cleared goods without paying duty after exceeding the exemption limit. Evidence collected showed discrepancies in records and raw material usage, leading to show-cause notices and subsequent demands for duty payment.Exceeding SSI Exemption Limit and Imposition of Penalties:The appellants exceeded the turnover limit for SSI exemption in August 2006 but failed to pay duty after registration. Show-cause notices were issued, resulting in demands for duty payment and imposition of personal penalties on partners, which were confirmed in the Order-in-Original, leading to the appeals before the Tribunal.Authenticity of Evidence and Lack of Corroborative Proof:The Revenue presented evidence of clandestine clearance based on a notebook recovered from an individual, but the partner disputed its authenticity. The notebook entries lacked detailed descriptions, and no further investigation was done to verify the claims. The appellants provided audited financial statements to support their turnover claim, highlighting the lack of credible evidence from the Revenue.Judgment:After considering the submissions and evidence, the Tribunal found the Revenue's case lacking merit. The evidence of clandestine removal was deemed unreliable due to discrepancies and lack of corroborative proof. The Revenue failed to establish clandestine clearance conclusively, and the basis for demanding duty was deemed insufficient. The audited financial statements provided by the appellants supported their claim of not exceeding the SSI exemption limit. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief as per law.