M/S. Shree Shyam Sponge & Power Ltd vs C.C.E.&S.T., Raipur

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Appeal No. E/59943/2013-EX[SM]

[Arising out of Order-in-Appeal No.189-190/CE/RPR-I/2013, dated 15.07.2013 passed by the C.C.E.(Appeals), Raipur-I]

M/s. Shree Shyam Sponge & Power Ltd. Appellant

Vs.

C.C.E.&S.T., Raipur Respondent

Appearance

Mr. L.P. Asthana, Advocate

Mr. Akshit Malhotra, Advocate - For Appellant

Mr. RK Gupta, DR - For Respondent

CORAM: Honble Mr. S.K. Mohanty, Member (Judicial)

Final Order No.54157/2015, dated 27.08.2015

Per Mr. S.K. Mohanty :

Brief facts of the case are that on the basis of intelligence report that some manufacturers of iron and steel are involved in clandestine removal through Shri Kailash Agarwal, proprietor of M/s. Kailash Traders, the preventive officers from Central Excise, Raipur searched the business premises of Shri Kailash Agarwal and found some incriminating documents, which allegedly revealed that the appellant during the period 2005-06 has clandestinely removed 262.49 MT of sponge iron without payment of central excise duty amounting to Rs.3,69,128/-. On the basis of investigation, the Department initiated adjudication proceedings and confirmed the demand of Rs.3,69,128/- and imposed equal amount of penalty on the appellant. In appeal, the Commissioner (Appeals) vide impugned order dated 15.07.2013 has upheld the said demand. Hence the present appeal before this Tribunal.

2. Shri LP Asthana, ld. counsel for the appellant submits that the demand has been confirmed solely based on the records maintained by the third party, without any cogent evidence that the goods have actually been consigned by the appellant and delivered to the buyers, who are known to Revenue through third party records. He further submits that the statement of Shri Kailash Agarwal, based on which the Department has proceeded against the appellant, is in no-way connected or has any experience as an iron and steel broker, and the said person is a mere rice merchant. Thus, according to the ld. counsel, in the absence of any tangible evidence that the goods have been removed from the factory of the appellant, the liability cannot be fastened and the penalty cannot be imposed on the appellant. To support his view that the goods were not removed clandestinely, he relied on the decision of the Tribunal in the cases of CCE, Ludhiana Vs. B.T. Alloys [2013 (297) ELT 387 (Tri.-Del)] and Rhino Rubbers Pvt. Ltd. Vs. Collector of Central Excise, Bangalore [1996 (85) ELT 260 (Tribunal)], Allahabad High Court decisions in the cases of Continental Cement Company Vs. Union of India [2014 (309) ELT 411 (All.)] and CCE, Meerut-I Vs. Parmarth Iron Pvt. Ltd. [2010 (260) ELT 514 (All.)] and Gujarat High Court decision in the case of CCE, Ahmedabad-II Vs. Chhajusingh S. Kanwal [2011 (272) ELT 202 (Guj.)].

3. On the other hand Shri RK Gupta, ld. Departmental Representative submits that the confirmation of duty demand on clandestinely removed goods is justified.

4. Heard both parties and perused records.

5. In the present case, the records reveal that the Central Excise Department has not conducted any independent enquiry at the appellants factory to ascertain the fact regarding clandestine removal of goods. Since third partys records have been solely relied on by the Department in support of clandestine removal by the appellant, the same is not acceptable as a reasonable ground for confirmation of the duty demand, without considering other parameters such as, excess consumption of electricity, purchase of raw-material, mode of receipt of payments from the buyers, etc. I find that the decisions cited by the ld. Advocate are to the effect that allegation of clandestine removal on the basis of the statement of a third party, cannot stand the scrutiny of law, for confirming the duty liability against the manufacturer.

6. In view of the above, I do not find any merits in the impugned order, and thus, the same is set aside and the appeal is allowed in favour of the appelant.

[Operative portion pronounced in the open court]

(S.K. Mohanty)

Member (Judicial)

A

??

??

??

??

-5-