TaxTMI 
TaxTMI 
2014 (4) TMI 718
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....per facts on record, M/s. Auto Gallon Industries Pvt. Ltd. (hereinafter referred to as Auto Gallon) are engaged in the manufacture of DC starter motors falling under Chapter Heading 8511.00 of the First Schedule to the Central Excise Tariff Act, 1985, for different models of two and three wheeled motor vehicles manufactured by M/s. Bajaj Auto Ltd. They were availing CENVAT credit of duty paid on various inputs. The starter motor is manufactured by using Armature Assembly, shaft, copper wire, yoke, bearings, brakes, slot insulators, lamination and commutators. During the manufacture of their final product, Armature Assembly comes into existence at the intermediate stage. Appellants were using the Armature Assembly captively for the manufacture of their final product but in some cases they were also clearing Armature Assembly under the cover of Central Excise invoices. They were importing the said Armature Assembly for the period prior to 2002 but subsequently they started manufacturing and assembling the same in their factory itself. The said Armature Assembly consists of Armature shaft, slot insulator, lamination, commutators and copper wire. 3. Their factory was visited by the ....
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....the fact that the quantity shown in receipt column of the register on a particular date does not tally with the quantity shown as issued for production in the stock inward register. They also produced on record a detailed chart showing the disposal of Armature Assembly/shaft and contested that the charges of clandestine removal cannot be upheld on the basis of such rough records maintained by their staff and in the absence of any corroborative evidence showing clandestine clearance, the demand cannot be confirmed. They submitted that majority of their production is being supplied to the motor vehicle manufacturers as original equipments and there are no evidences that such motor vehicles manufacturers have also not reflected the clandestinely removed goods in their records. Their buyers are availing CENVAT credit and by no stretch of imagination can clear their final product without payment of duty. 5. The above contentions of the appellants were not accepted by the adjudicating authority, who confirmed the demand and imposed penalties as already detailed. The said order of the original adjudicating authority was upheld by the Commissioner (Appeals), who rejected the appeals. He....
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....ound four years and apart from the said rough private production records maintained by the assessee's staff, there is virtually no other evidence to reflect upon the clandestine activities of the appellants. Admittedly, they are manufacturing starter motors for OE customers, who are availing CENVAT credit of duty paid on the same. The chart produced by the appellants before the adjudicating authority is being reproduced below for better appreciation:- Sl. No. Description Number of Items (a) As per Annexure 'A' of SCN Armature Assembly/Shaft issued for production as per stock register 1,94,376 (b) Quantity of Armature Assembly/Shaft actually used for production as per statement-4 enclosed 1,87,487 (c) Production of Starter Motor as per RG-1 Register 1,76,001 (d) Process rejection of Armature Assembly/ Shaft 3,425 (e) Sale of Starter Motor as per invoice but not in RG-1 600 (f) Sale of Armatures as per invoice but not in RG-1 2,748 (g) Goods replaced under D-3 (As per RG-1) 604 &nbs....
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....acture and removal. Further, it also stands held by various courts that the confirmation of demand of duty cannot be on theoretical basis of input output ratio. The appellant's 95% production is being sold to the manufacturers of three wheeled motors, who will admittedly not accept the clandestinely removed goods. At this stage, I may refer to some of the decisions on the subject. Tribunal in the case of Vishwa Traders Pvt. Ltd. Vs. CCE, Vadodara [2012 (278) ELT 362 (Tri.-Ahmd.)] had held that in the absence of any evidences to show the unaccounted purchases of all the raw-materials required for the manufacturer of the final product, the allegations of clandestine removal cannot be sustained, on the basis of the statement of supplier of one of the raw-materials. The said decision of the Tribunal stand confirmed by the Hon'ble High Court of Gujarat reported in 2013 (287) ELT 243 (Guj.). Similarly, the Hon'bleHigh Court of Gujarat in the case of CCE&ST, Daman Vs. Nissan Thermoware Pvt. Ltd. [2011 (266) ELT (Guj.)] observed that the shortages of raw-materials detected by the officers at the time of their visit and admitted by the Director cannot lead to the allegation of cl....