AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 126
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....s dispatched. Statements were obtained from the Vice President of the Company, Assistant Security Officer and also from the transporters. However, the said statements were retracted. Based on the inspection, a show cause notice, dated 02.09.2010, was issued to Unit I of the appellant, proposing to demand a sum of Rs. 12,60,211/-, towards CENVAT Credit, on the allegation that in Unit I of the appellant has cleared credit availed raw materials, without proper invoices and attributed shortage of the stock, as recorded by the Inspecting Officer, to such removal. 3. Inspection was also done, in Unit II of the appellant on 16.07.2008 and shortage of raw materials was found. On 24.07.2008, statements were recorded from the Vice President of the appellant-Company. The appellant-Company sent a letter, dated 28.07.2008, to the department to return the records and documents, so as to enable them, to reconcile the shortage. For Unit II, a show cause notice, dated 23.06.2011, was issued, proposing to demand a sum of Rs. 1,61,490/-, towards CENVAT Credit, on the allegation of shortage of stock. 4. In both the show cause notices, the department alleged that there was shortage of raw-m....
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....tment did not make any appeal against the Order-in-Original No.48/2011, dated 29.09.2011, on the finding recorded, in favour of the appellant, on the alleged clandestine removal of raw materials and restricted the demand only to the shortage of raw materials, the first appellate authority had acted beyond the scope of the appeal and that therefore, the order of the appellate authority, required reversal. It is the case of the appellant that without appreciating the facts, the Tribunal, in Final Order No.40315 of 2016, dated 04.02.2016, remitted the matter, with further directions. As against the said order, the instant Civil Miscellaneous Appeal has been filed, on the following substantial questions of law, "(1) Whether the Tribunal and the first appellate authority have jurisdiction to interfere with the part of the order of the adjudicating authority which does not form the subject matter of appeal before the first appellate authority? (2) Whether the Tribunal can enlarge the scope of remand order, made by the first appellate authority which itself was not subject matter of appeal before him and contrary to Section 35A of the Central Excise Act, 1944? (....
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.... the department, on the specific finding on the alleged clandestine removal. 10. He further submitted that when the adjudicating authority himself had given a categorical finding that 36 slips relied on, in the notice alone, cannot vouch, for the alleged clandestine removal, neither the first appellate authority nor the Tribunal, has jurisdiction to test the correctness of the said finding, recorded on proper appreciation of fact, evidence and submissions of the appellant and if the department had any grievance against any finding, it ought to have reviewed the said order and filed an appeal, before the first appellate authority. 11. According to mr.K.Jayachandran, learned counsel for the appellant, the Tribunal has failed to appreciate that consequent to the amendment to Section 35A of the Central Excise Act, the first appellate authority has no jurisdiction and authority to remand any matter and therefore, the Tribunal ought to have appreciated the said submission and consequently, ought to have held that the order of the first appellate authority, remanding the matter, on the aspect of alleged clandestine removal, was not called upon, by the department, and hence, without ....
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....y, vide order, dated 29.09.2011, made in Order-in-Original No.48 of 2011, dated 29.09.2011, at Paragraphs 46 and 47, has observed, as hereunder: "46. It was stated that during the cross examination, the officer admitted to the follows:- (1) That even though the indication of the vehicle number, name of consignee, quantity and material grade in the loose slips made the officers believe that the 36 loose slips could be documents used for clearance of materials from the factory, they admitted that not all the loose slips contained the vehicle number; (only 4 loose slips had vehicle numbers and the rest did not have); (2) That neither the address of the consignee nor the value of the consignment was available in the loose slips; (3) That even though the loose slips suggested the name of the consignees, one of which was Sandip Industries, follow-up action and stock verification carried out by officers at Sandip Industries, but no discrepancies were noticed. 47. It was stated that the above admissions clearly revealed the following:- (a) That the 36 loose slips, in the background of the facts that there was no shortage or excess of ra....
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.... 17. Mere documentary evidence of 36 loose slips was not adequate enough to prove the clandestine removal of inputs. The following case laws hold that to prove clandestine removal, more documentary evidences are required. For sustaining an allegation of clandestine removal evidence of unaccounted purchase of raw materials and evidence regarding the buyers of the. so called unaccounted goods is essential and necessary as held by The Hon ble Tribunal in the case of Dalmia Vinyls (P) Ltd vs CCE reported in 2005 (192)ELT 606. "It is well settled that the burden for proving the clandestine clearances is upon the Revenue and is required to be discharged by production of sufficient and affirmative evidence, which is lacking in the present case as held by the Hon'ble Tribunal in the case of Utkal Galvanisers Ltd vs CCE reported in 2003(158) ELT 42-T. *Clandestine clearance and evasion of excise duty are serious offences. Such offence cannot be found without adequate evidence. We find that in a case of clandestine removal concrete and cogent evidence is essential as held by the Hon'ble Tribunal in the case of Harika Resins Pvt....
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....rtment for the limited purpose of examining the aspect of the dropped portion of the demand and to arrive at a plausible explanation for the shortage of inputs as alleged in the show cause notice. (v) The proposals of penalties made under Rule26 of the Central Excise Rules, 2002, against the Directors of the Appellants have to be dealt with by the Department, while re-visiting the issue on the aspect of clandestine. (vi) No doubt the Appellants shall be given a fair opportunity of being heard by the adjudicating authority before passing any Orders in terms of Points (iv) and (v) above." 17. Admittedly, the department has not filed any appeal against the Order-in-Original No.48 of 2011, dated 29.09.2011, by which, the original authority, has recorded a categorical finding that, mere documentary evidence of 36 loose slips found in the security room is not enough to prove clandestine removal of raw materials from Unit I to Unit II. The original authority has also held that the allegation of clandestine removal is also not substantiated. 18. Section 35-A of the Central Excise Act, 1944, sets out the procedure to be followed by the appellate authority....
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....d that there were three contributing factors for adjudication, and they are extracted hereunder: "7.1. No doubt, there were three contributing factors to the adjudication. The first is the outcome of the inventory made in the course of search to both the premises on 15th and 16thJuly, 2008. There is a material on record to show that the appellant challenged inventory taken on that day, on the ground that was taken in darkness due to no power supply. There appears a communication dated 28.07.2008 of the appellant in that regard objecting to the act of search party. That is on record. Therefore that deserves consideration. Causing enquiry with the Electricity Authority about power supply during that period, if the authority finds the plea of no power supply on the date of inventory is truthful and inventory was taken in dark,he shall examine whether the manner of inventory taken has suffered from any legal infirmity to redress grievance of the appellant on reconciliation of stock figure. 7.2. Secondly, the authority shall examine whether inventory data maintained in the computer is reliable and if so, that shall be reconciled with the physical inventory of stock fig....
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....passing a just and proper order, in exercise of powers, conferred on him, under the proviso, to sub-Section 3 of Section 35A of the Central Excise Act, 1944, yet the Section, mandates adherence to the principles of natural justice, by issuing a notice, to the assessee. Material on record does not disclose that the Commissioner of Central Excise (Appeals) has followed the mandate. 25. In the absence of any appeal filed by the department on the finding, relating to alleged clandestine removal of raw materials, the appellant cannot be put in a worse position, in their own appeal, and in such circumstances, the principle of "no reformatio in peius" would come into play, which means that a person should not be placed in a worse position, as a result of filing an appeal. It is a latin phrase, expressing the principle of procedure, according to which, using the remedy at law, should not aggravate the situation of the one who exercises it. 26. Had the assessee not filed an appeal, it would not be placed in a situation of inviting an adverse order, on the aspect of clandestine removal. A party who files an appeal, expects that the appellate authority would only address the groun....