Revenue appeal dismissed over clandestine removal allegations lacking concrete evidence of unauthorized manufacture

CESTAT Kolkata dismissed the Revenue's appeal challenging clandestine removal allegations. The tribunal found no evidence of excess production, raw material consumption, or electricity usage to support claims of unauthorized manufacture and clearance. The demand was based solely on quantity differences between railway receipts and excise invoices without substantive proof. The department failed to establish clandestine activities through concrete evidence, relying only on assumptions. The original order dismissing the differential duty demand was upheld, confirming that mere discrepancies in documentation without corroborating evidence cannot sustain clandestine removal charges.

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Issues involved:
The issues involved in the judgment are related to the demand of Central Excise duty based on discrepancies between the quantity mentioned on railway receipts and central excise invoices prepared by the Respondent, alleging clandestine removal without proper evidence.

Summary:

Issue 1: Discrepancy in Quantity
The Respondent, engaged in the manufacture of Calcined Alumina, faced a demand for Central Excise duty due to discrepancies in quantity mentioned on railway receipts and central excise invoices. The department alleged clandestine removal without concrete evidence, leading to the demand for duty amounting to Rs. 9,16,94,272. The Ld. Commissioner dropped the demand, prompting the department to file an appeal.

Department's Submission:
The department argued that the Respondent accepted railway weighment for freight payment but paid excise duty based on their own weighment, without providing a clear explanation for the discrepancy.

Respondent's Submission:
The Respondent contended that the demand was based on assumptions, highlighting that excess weight on railway receipts was not accepted by them. They emphasized the accuracy of their weighbridge, certified by the Department of Legal Metrology, and refuted the allegations of clandestine removal without substantial evidence.

Judgment:
The Tribunal observed that the department's demand was solely based on assumptions, lacking evidence of excess production or consumption to support the allegation of clandestine removal. The adjudicating authority's findings, including the random nature of discrepancies and the accuracy of the Respondent's weighbridge within tolerance limits, were upheld. The lack of corroborative evidence and reliance on railway receipts alone were deemed insufficient to sustain the demand. Consequently, the appeal filed by the department was rejected, and the Respondent's cross objection was disposed of in favor of upholding the Ld. Commissioner's order dropping the demand.

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