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2025 (11) TMI 1093
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....he provisions of rules 4, 10(1) and 11(1) of the Central Excise Rules, 2002. 1.2. The said Notice was adjudicated and demand of Central excise duty of Rs. 42,73,239/- has been confirmed, along with interest and equal amount of duty as penalty, vide Order-in-Original No. 01/ADDL. COMMR./CE/KOL-VII/ADJN/2014-15 dated 30.05.2014. 1.3. On appeal, the Ld. commissioner (Appeals) upheld the demand of Central excise duty (including cess), along with interest and penalty, vide the impugned Order-in-Appeal No. 104/KOL-V/2017 dated 27.11.2017. 1.4. Aggrieved by the confirmation of the demand of central excise duty (including cess), along with interest and penalty thereon, the appellant has filed this appeal. 2. During the course of hearing, the appellant pointed out that they have declared the quantity of major input viz., Timber consumed and finished goods viz., Plywood, Sheets of Plywood (Veneer) and Block Board produced during the months of April, 2012 to May, 2013 in the E.R.-6 monthly returns filed by them. They have also stated that the month-wise input-output ratios derived from the above declared quantity of consumption of Timber and production of finished goods are 1:1311....
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....s are recorded in the Daily Stock Account (DSA) only after attaining commercially saleable condition. In support of their claim, the appellant has also submitted a process flowchart of manufacture of plywood and sheets of plywood from timber (Logs), which has been enclosed as Annexure - A. Further, the appellant submitted different statements like month-wise timber consumption, statement of WIP after different process which are enclosed as Annexure - B. (iii) The computation method adopted in Annexures I and II to the SCN is fundamentally flawed, as it incorrectly aggregates the quantities of Plywood, Veneer, and Block Board and assumes that one sheet of Veneer yields one sheet of Plywood, ignoring that multiple Veneer layers are required to make a single Plywood sheet. The significant generation of waste and scrap has also been ignored. Moreover, the alleged corroboration of excess production with electricity and resin consumption is baseless, as no standard consumption norm per unit of output has been shown. The Appellant submits that the alleged clandestine production and removal of finished goods is built-up not on the basis of any document of unaccounted production an....
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..... In view of the above submissions, the appellant prayed for setting aside the demands of central excise duty (including cess) confirmed against them in the impugned order, along with interest and penalty, and allowing the appeal filed by them. 4. The Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order. She submits that the output of finished goods was found to be abnormally low during the months of December, 2012, January, 2013 and February, 2013; that the electricity consumption and resin consumption in these three months were higher than those of other months. Accordingly, she justified the demand of central excise duty confirmed in the impugned order. 5. Heard both sides, perused the appeal records and the submissions made by both the sides. 6. We observe that the entire case of the Department rests solely on a theoretical and unverified input-output ratio derived from E.R.-6 returns. We find that the Department has not brought in any corroborative evidence such as physical stock verification or independent records. It is a settled principle of law that mere assumptions or presumptions cannot be a substitute for proof, beyond reas....
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....should also show that the goods were produced and sold to individuals in the market by collecting evidence of purchase of inputs and sale of final goods as well as power consumption. In the ST. Texturiser v. CCE, Surat, it has been held that clandestine manufacture and removal being quasi-criminal in nature were required to be established beyond doubt by producing evidence in the shape of procurement of raw material, shortage, excess use of electricity, flow back of funds and purchase of final products by customers. In the present case, the Show Cause Notice enumerates the results of search in the premises of various purchasers of the paper from the appellant for the year 1985. The result of those search is that the said purchasers received goods from the appellant but the gate passes (GP-1) evidencing payment of duty were not available, but those facts do not form the basis of the demand. The demand is arrived at on a theoretical basis. On the basis of different sources like weighbridge register, RT-5 etc., the raw materials supposed to have been utilized by the appellant have been arrived at. On the basis of a letter from Hindustan Paper Mills and also Shri John, Superintendent (....
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....ision is reproduced below: "6. After going through the impugned orders, I agree with the submissions made by the ld. Adv. Apart from applying the input:output ratio of 1:1 to the two financial years 1994-95 and 1995-96 there is no other evidence on record to reflect upon the clandestine activities of the appellant. It is also not clear as to why only two financial years have been chosen by the Revenue for applying the said ratio and why the entire period of five years have been ignored by them. It is well settled principle of law that charge of clandestine removal is required to be proved by the Revenue by production of tangible and positive evidence. There being none in the present case. I find no justification for confirmation of demand against the appellant. The impugned order is accordingly set aside and appeal allowed with consequential relief to the appellants." 6.3. It is well settled that central excise duty cannot be demanded on the basis of assumptions and presumptions or preponderance of probabilities and clandestine clearance is a serious allegation, which requires cogent corroborative evidences to substantiate the allegations, which are absent in this case.....
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....aveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 15. In view of the above, we are of the opinion that when there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw material out side the books have been proved. 16. In the light of the above discussions and considering the totality of the case, we are satisfied that no case is made out for extra so called clandestine sale of the Portland Cement to the said parties. We are satisfied that the first appellate authority has rightly deleted the addition and cancel the penalties. Hence we hereby set aside the impugned order passed by the Tribunal and restore the order passed by the first appellate authority, along with the reasons mentioned herein. 17. In the result, all the appeals filed by the appellants are hereby allowed." 6.5. A similar issue has also been dealt with by the Tribun....
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....sponsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. In fact, this Bench has considered some of the case-law on the subject in Centurian Laboratories v. CCE, Vadodara [2013 (293) E.L.T. 689]. It would appear that the decision, though rendered on 3-5-2013, was reported in the issue of the E.L.T., dated 29-7-2013, when the present case was being argued before us, perhaps, not available to the parties. However, we have, in that decision, applied the law, as laid down in the earlier cases, some of which now have been placed before us. The crux of the decision is that reliance on private/internal records maintained for internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co-ordinate Bench of this Tribunal has, in another decision, reported in the E.L.T. issue of 5-8-2013 (after hearings in the present appeals wer....