2025 (12) TMI 365 - HC - Central Excise

Petition dismissed; excise duty demand upheld for clandestine yarn removal after stock shortage confirmed by concurrent factual findings

M/s. Anshupati Textile Versus The Customs Excise and Service Tax Appellate Tribunal

HC upheld the concurrent findings of the Adjudicating Authority, Appellate Authority and Tribunal that there was shortage of 68.996 MT of single ply yarn ... Clandestine removal - 68.996MT of single yarn - liability of appellant to pay duty on off spindle stage - HELD THAT:- From the perusal of record, it is evident that matter was twice examined by Adjudicating Authority, Appellate Authority and thereafter Tribunal. All the authorities have concluded that there was shortage at the stage of single ply yarn. The authorities have recorded reasons for holding that there was shortage of stock at single ply yarn stage. The findings recorded by authorities are pure findings of fact. The petitioner has placed on record invoices of single ply yarn to support its contentions that there was no clandestine removal of finished goods and every single kg yarn was duly accounted for. The authorities including Tribunal examined RG-1 register, invoices and manufacturing process and thereafter concluded that there was shortage of stock at single yarn stage. This Court while adjudicating reference petition cannot reappreciate evidence already appreciated by authorities. The Court cannot form an opinion other than formed by authorities/Tribunal unless order is passed without appreciating evidence on record or order is based upon no evidence. In the instant case, there was search by authorities and during the course of search physical verification of stock was conducted. The material physically found was compared with recorded in RG-1 register. The question whether there was shortage on the date of search or not is a pure question of fact. The Tribunal has duly recorded reasons while upholding demand. This Court is of the considered opinion that there is no factual or legal infirmity in the impugned order passed by appellate Tribunal - Petition dismissed. 1. ISSUES PRESENTED AND CONSIDERED (1) Whether the finding that 68.996 MT of single ply yarn was clandestinely removed without payment of excise duty was supported by evidence or involved any question of law. (2) Whether, in a reference under central excise law, the High Court can reappreciate evidence and interfere with concurrent factual findings of the adjudicating and appellate authorities and the Tribunal on alleged shortage of excisable goods. 2. ISSUE-WISE DETAILED ANALYSIS Issue (1): Evidentiary basis for finding of clandestine removal and existence of a question of law Interpretation and reasoning The Tribunal recorded that the assessee cleared single yarn on payment of duty under Rule 52-A invoices, that the weights shown in the invoices matched the quantities debited from the RG-1 register, and that balances in RG-1 were struck after deducting the quantity of single yarn removed for manufacture of doubled yarn. On this basis, the Tribunal rejected the plea that the detected shortage of 68.996 MT was not real but represented wastage generated in converting single yarn into doubled yarn. The Tribunal found that wastage from conversion had 'nothing to do' with the shortage of single yarn recorded on physical verification. It also noted that the assessee's contention that the entire single yarn was removed daily for conversion stood falsified by RG-1 photocopies, which showed opening balances on subsequent days; if all yarn was removed daily, the next day's opening balance would necessarily be nil. The High Court noted that the matter had been examined twice by the adjudicating authority and Commissioner (Appeals), and then by the Tribunal, all of whom concurrently concluded that there was shortage at the single ply yarn stage and that such shortage represented clandestine removal without payment of duty. The Court observed that invoices, RG-1 register and manufacturing process had been examined by the authorities. The Court held that the existence or non-existence of shortage on the date of search, and the inference of clandestine removal from such shortage, were pure questions of fact based on appreciation of evidence. Conclusions The Court held that the authorities' finding of shortage and consequent clandestine removal of 68.996 MT of single ply yarn was supported by evidence and constituted a pure factual finding. No legal infirmity was shown, and no question of law arose from the Tribunal's order for consideration in reference. Issue (2): Scope of High Court's jurisdiction in reference to interfere with concurrent factual findings Legal framework (as discussed) The Court proceeded on the basis that in a reference it is confined to questions of law arising from the Tribunal's order and cannot reassess or reweigh evidence already appreciated by the adjudicating authority, appellate authority, and Tribunal, unless the impugned order is based on no evidence or is passed without appreciating the evidence on record. Interpretation and reasoning The Court observed that: (i) there was a search and physical verification of stock; (ii) the stock actually found was compared with entries in the RG-1 register; (iii) the authorities and Tribunal had examined RG-1, invoices, and the manufacturing process; and (iv) reasons had been recorded at each stage to sustain the finding of shortage and consequent clandestine removal. In these circumstances, the Court held that it could not 'reappreciate evidence already appreciated by authorities' or 'form an opinion other than formed by authorities/Tribunal' when the orders were neither unsupported by evidence nor passed without appreciating the material on record. Conclusions The Court held that its reference jurisdiction did not permit reappreciation of evidence or interference with concurrent factual findings of shortage and clandestine removal. As the impugned order suffered from no factual or legal infirmity and was not based on absence of evidence, no question of law arose, and the reference was dismissed.