Surya Wires Private Limited Vs. Commissioner of Customs, Central Excise & Service Tax - (Customs, Excise and Service Tax Appellate Tribunal) (13 Jul 2020)

Clandestine removal has to be established beyond doubt by adducing strong, sufficient and positive evidence and burden of proving the same is on Department

MANU/CE/0091/2020

Excise

In facts of present case, the Appellant was issued a show cause notice proposing the recovery of excise duty amounting to Rs. 7,61,199 alongwith the demand of Rs. 28,48,796. Interest was also proposed with the imposition of penalty upon the Director of the Appellant under Rule 25 of Excise Rules, 2002 read with Rule 15 of Cenvat Credit Rules, 2002. The said show cause notice was issued after a search was conducted in the premises of the Appellant by the Central Excise Department. It was observed after conducting physical verification of the stock of finished goods and raw-material available in the Appellant's premises that, the Appellants are engaged in procuring of unaccounted raw-materials for illicit manufacture of finished goods and its clandestine removal without payment of Central Excise duty. The said proposal was confirmed vide Order-in-Original. The appeal thereof has been rejected. Being aggrieved, the Appellant is before present Tribunal.

The stock verification on the basis of eye estimation and the statements recorded at the time of investigation are the only source of reliance for the adjudicating authority to confirm the demand. Though the documents as recovered at the time of search are also been held to be the evidence proving the clandestine removal by the Appellant, but documents explaining the noticed shortage were submitted by the Appellant at the very initial stage of replying the show cause notice. There is no denial about receipt of the said documents. However, same are alleged to be an afterthought. A verbal submission can definitely be an afterthought but the documents of the previous dates, irrespective submitted later cannot be a case of afterthought unless and until so proved with the cogent evidence.

It is settled law that, onus is on Revenue to prove otherwise with cogent evidences that the goods have been removed by the manufacturer without the duty paying invoices as was held in the case of Bharat Seats Ltd. Vs. CCE.

The Tribunal in the case of CCE Vs. Sigma Castings Ltd. has held that, where the shortages have been made purely on eye estimation basis without any actual weighment of the goods the demand alleging clandestine removal cannot be upheld. Clandestine removal has to be established beyond doubt by adducing strong, sufficient and positive evidence and the burden of proving the same is on the Department. In the present case, present Tribunal do not find any such evidence in corroboration to the presumption of the Department, therefore, demand cannot be sustained.

Further, demand has been confirmed invoking the extended period of limitation alleging suppression of facts on part of the Appellant but it is an admitted fact that monthly E.R. Returns have regularly been filed by the Appellant. It becomes clear that all the relevant facts were in knowledge of the Department authorities since beginning. Except omission to file the declaration about job work from Sona Wires in terms of Notification No. 214/86-CE dated 25th March, 1986 there is no other allegation which may amount as suppression. Law has been settled that, every omission cannot be suppression.

The findings of the adjudicating authority being merely on the basis of their own presumption, on the basis of wrong interpretation of the statement of the witnesses as admission and for wrongly holding the late declaration as suppression are, therefore, not sustainable. The total demand confirmed accordingly, stands unjustified. The order under challenge is set aside and the appeal stands allowed.

Relevant : CCE Vs. Sigma Castings Ltd. MANU/CE/0064/2012, Bharat Seats Ltd. Vs. CCE

Tags : DEMAND CONFIRMATION LEGALITY