Allegation of Clandestine Removal without evidence or proof: CESTAT quashes ₹3.17 L Excise Duty Demand [Read Order]

The Kolkata bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) quashed the ₹3.17 lakh excise duty demand due to the allegation of clandestine removal being made without any evidence or proof. The Assessee M/s. Tega Industries Ltd. is a Company engaged in the business of manufacture and distribution of wear resistant rubber products and products for mineral processing industries at its plant in Samali and Kalyani in the State of West Bengal. A SCN dated 19.01.2012 was issued to the appellant demanding Central Excise duty and reversal of Cenvat Credit on various issues. The Notice was adjudicated vide the impugned order wherein the demand of Central excise duty and denial of Cenvat credit as proposed in the Notice has been confirmed along with interest and equal amount of duty as penalty. Aggrieved against the impugned order, the appellant has filed this appeal. Regarding short payment of Central Excise duty amounting to Rs. 53,55,205/- on stock transfer of goods to their sister concern, the appellant submits that while clearing the goods from their Samali factory to Kalyani Unit, the assessable value was arrived at on the basis the previous year’s cost. At the end of the financial year, when the actual figures were available, CAS certificate was obtained and the differential duty was paid along with interest and the same was also intimated to the Department. However, demand has been raised on the Appellant by arbitrarily holding that certain elements of cost have not been added while ascertaining the assessable value. The assessee submitted that the entire issue was revenue neutral and thus the demand is liable to be set aside on this ground alone. In this regard, reliance is placed on the decision of this Tribunal in the case of Hindalco Industries Ltd. v. CCE BhubaneshwarII wherein on similar facts, the tribunal has held that when the entire exercise is revenue neutral, the demand is not sustainable as the duty paid will be available as credit for their sister unit and there is no loss of revenue to the exchequer. Reliance is also placed on the decision of this Tribunal in the case of Apex Auto Ltd. v. CCE. Accordingly, the assessee contended that the demand confirmed in the impugned order on this count is not sustainable. Regarding denial of CENVAT Credit of Rs.25,020/- related to services not used in relation to manufacture of final products, the appellant submits that the credit in this case has been availed by the Appellant on certain installation and other services which were availed in respect of Erection, Commissioning, Installation provided by the assessee at the head office. The said fact has been disregarded by the department and this credit was denied without giving any reason. Accordingly, they submit that they are entitled for this credit. Regarding demanding duty of Rs.3, 17,284 on account of difference in book stock and physical stock in respect of Plate Hardox and MS Plate, the assessee submitted that duty has been demanded on the assumption that the said goods have been removed without payment of duty. The assessee submitted that the difference in the book stock was found only for one specific consignment due to the reason that the book stock of M.S. plates are periodically updated on confirmation of the said inputs being used for the manufacture of finished goods. However, this has been completely ignored by the adjudicating authority while passing the Impugned Order. Further, the assessee submitted that no proof/evidence has been cited by the department to claim that the goods have been clandestinely removed by the assessee without payment of duty. The bench observed that there was no specific finding in the impugned order for denial of this credit to the assessee. Accordingly, further hold that the assessee was eligible for this credit. Regarding demanding duty of Rs.3, 17,284 on account of difference in book stock and physical stock in respect of Plate Hardox and MS Plate, further observed that duty has been demanded from the assessee on the assumption that the said goods have been removed without payment of duty. Further observed that the department has not produced any evidence to substantiate the allegation that the goods have been clandestinely removed by the assessee without payment of duty. It is a settled law that no demand can be raised without any evidence or proof of clandestine removal. Since there is no evidence available on record to substantiate the allegation of clandestine removal, the bench held that the demand confirmed in the impugned order on this count is not sustainable and accordingly tribunal set aside the same. Since the two member bench of the CESTAT comprising K. Anpazhakan ( Technical member) and Ashok Jindal ( Judicial member) highlighted that the demands of central excise duty and the reversal of Cenvat Credit confirmed in the impugned order are held to be not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise. Consequently. CESTAT set aside the impugned order and allowed the appeal filed by the assessee. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Allegation of Clandestine Removal without evidence or proof: CESTAT quashes ₹3.17 L Excise Duty Demand [Read Order]

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Allegation of Clandestine Removal without evidence or proof: CESTAT quashes ₹3.17 L Excise Duty Demand [Read Order]

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