2018 (1) TMI 307

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..... The following questions of law are sought to be answered by this Court:- "1. Whether the Tribunal has erred in setting aside the demand, interest and penalty without giving a categorical and conclusive finding on the veracity of the basis of arriving at suppressed production ? 2. Whether in view of the judgement cited hereinabove the Tribunal has erred in absolving the authority and instead placing the burden on the department and thus has wrongly reversed the order of the adjudicating authority affirmed by the appellate Commissioner ? 3. Whether on the facts and in the circumstances the Hon'ble CESTAT is liable to be quashed ?" The facts in brief are that the assessee M/s Auto Gallon Industries Pvt. Ltd, (hereinafter referred ....

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....ng the above period. Copper-wire waste was also generated during the course of manufacture of Starter Motors but, on scrutiny of the RG-1 register for the above said years, it came to light that its production was never recorded in the daily stock register. It thus appeared that the same was removed clandestinely by the unit. Scrutiny of the cash book for the year 2002-03 and related vouchers revealed that the appellants were engaged in generation of unaccounted cash. On scrutiny of the file containing miscellaneous papers resumed from the unit, certain charts were found which had names of employees/officers along with details payments made to them in cash on regular basis over and above their monthly emoluments. The said payments had been....

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....worked out as 17251 Nos. valued at Rs. 2,99,17,470/- and involving Central Excise duty of Rs. 47,86,795/-. A show cause notice dated 11.10.2004 was, therefore, issued to the appellants. The adjudicating authority decided the case vice the impugned order-in-Original No.12/ADC/GZB/2005 dated 30.11.2005 and confirmed the above demand. He also imposed an equal amount of penalty under Section 11AC of the Central Excise Act, 1944. He further imposed a penalty of Rs. 1,00,000/- each on Sh. V.P. Grover, General Manager and Sh. Sanjay Gupta, Accounts Manager of the party, under Rule 26 of the Central Excise Rule, 2002. Being aggrieved with the aforesaid order-in-original the party filed an appeal with the Commissioner (Appeals), Central Excise, Gh....

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....their identity; no enquiry as regards procurement of various raw-materials required for manufacture of final products; no enquiry as regards the transportation of the goods; no enquiry as regards the receipt of consideration of the said clandestinely removed final product It is well settled law that shortage of one of the raw-materials cannot lead to the inevitable conclusion of clandestine manufacture 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 appellants' 95% production is being sold to the manufacturers of three wheeled motors, who will admittedly not accept clandestinely removed goods as unaccounted for goods. The Tribu....