Customs, Excise and Service Tax Appellate Tribunal

Satya Power & Ispat Ltd vs Commissioner of Central Excise

MANU/CE/0328/2022

13.09.2022

Excise

Mere shortage cannot ipso facto lead to the allegation of clandestine removal

Present appeal has been filed challenging the Order-in-Appeal passed by the Commissioner (Appeals), by which the learned Commissioner dismissed the appeal filed by the Appellant by holding that the order passed by the Adjudicating Authority for denial of credit and imposition of penalty does not warrant any interference.

In the instant case, while explaining the procedure, learned counsel submits that during the manufacturing process of the sponge iron, iron ore fines are generated at the time of screening/grading and crushing, which is nothing but waste and in order to keep the production at a constant pace the aforesaid process of screening is essential and indispensable and iron ore and coal fines contents have to be removed else it would stick on the inner wall of the kiln and reduce the space inside the kiln, called accretion. Therefore it can safely be concluded that the fines etc are by-product or incidental product which cannot be said to be inputs. This issue is decided in favour of the Appellant.

So far as short receipt of 268.420 MT of coal is concerned on which department is demanding duty, that is also not sustainable. There is no allegation or any evidence of clandestine removal of the said quantity of coal. Mere shortage cannot ipso facto lead to the allegation of clandestine removal. According to learned counsel, the said short receipt is sometimes due to transit loss/theft and as per industrial practice ± 4% is permissible. Since this short receipt cannot be treated as clandestine removal therefore, there is no reason not to accept the submission/explanation given by the learned counsel. Therefore, demand cannot be sustained.

Regarding the issue of wrongly availed Cenvat credit of Rs.9,768 on input service paid on GTA service against sponge iron received back from the customers is concerned, this issue is also covered in favour of the assessee in view of the decision of a co- ordinate Bench of the Tribunal in the matter of Chitrakoot Steel & Power Pvt. Ltd. Vs. CCE, Chennai in which it has been held that no demand can be made for input services, if the finished goods are received back. As in view of facts of this case, all the issues involved are decided in favour of the Appellants. Appeal allowed.

Tags : Demand Confirmation Penalty

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