https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770207 https://www.taxtmi.com/caselaws?id=770207 Demand of duty raised on the basis of input output ratio and without having any evidence towards clandestine manufacture and removal of goods without payment of duty - confiscation of quantity of 157.436 M.T. of Sponge Iron found in excess, under Rule 25 of the Central Excise Rules - HELD THAT:- There are force in the appellant's argument that the entire proceedings have been built on the assumptions of the input/output ratio of Sponge Iron vis-à-vis end product. The Revenue has considered the input / output ratio of 1 : 1.67 as sacrosanct based on the expert opinion of Institute of Mineral Technology, Govt of India and another opinion of Popuri Engineering & Consultancy Services, Hyderabad. Revenue has not brought in any corroborative evidence to the effect that the manufactured goods have been cleared clandestinely and cash transactions have taken place. No statements have been recorded from any of the purported buyers, vehicle owners. No private records with reference to the cash transactions have been seized. All these make to conclude that the Department has proceeded purely based on the assumptions and presumptions basis without verifying their allegations. The facts of the present case are similar with the Revenue mainly relying on the input / output ratio relied on source which are not tested independently by them and hence these case laws are squarely applicable in the present case. It is also found that the alleged shortage is also not properly corroborated by the Revenue. Hence, the Redemption Fine and penalty imposed are not legally sustainable. Accordingly, the impugned order set aside and the appeal allowed on merits. Time limitation - HELD THAT:- In cases of allegation of clandestine removals, it requires detailed investigation, verification of various documents so as to finalize the Show Cause Notice. Since no specific facts have been brought in the SCN about the suppression on the part of the appellant, the delay in issuing of the SCN after having all the facts on record does not come to the rescue of the Department. Hence, the impugned order is set aside even on account of limitation. Conclusion - i) The demands for excise duty based solely on input-output ratio estimates without independent verification and corroborative evidence of clandestine manufacture and removal cannot be sustained. ii) The alleged shortage is also not properly corroborated by the Revenue. Hence, the Redemption Fine and penalty imposed are not legally sustainable. iii) Since no specific facts have been brought in the SCN about the suppression on the part of the appellant, the delay in issuing of the SCN after having all the facts on record does not come to the rescue of the Department. Hence, the impugned order is set aside even on account of limitation. Appeal allowed. Case-Laws Central Excise Wed, 07 May 2025 00:00:00 +0530