Charges Of Clandestine Removal Not Sustainable Merely On The Basis Of Difference In Figures Of Audit Report And ER-1 Return: CESTAT

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that charges of clandestine removal are not sustainable merely on the basis of the difference in figures between the audit report and the ER-1 return.

The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that merely on the basis of the difference in the figures of the audit report and the ER-1 return without establishing the parameters of clandestine manufacture and removal of goods, the charge of clandestine removal is not sustainable.

It was alleged that the appellant/assessee suppressed the facts from the central excise department by not mentioning the production and clearance in the central excise statutory returns in form ER-1 and, therefore, evaded the payment of duty. The show cause notice was issued to the appellant on March 1, 2011, for the period 2006–07. The matter was adjudicated, and the demand for duty was confirmed, alleging the clandestine removal of goods.

The appellant submitted that, as per the show cause notice, the demand has been confirmed due to some variation in the figures shown in the audit report and ER-1 filed by the appellant before the department without any evidence to show that the appellant has cleared clandestinely manufactured goods. The period involved is 2006-07, whereas a show cause notice was issued on March 1, 2011 on the basis of the figures shown in the audit report for the year 2006-07. As the audit report is a public document available on record, in those circumstances, an extended period of limitation is also not invocable.

The tribunal held that apart from differences in figures in financial records and ER-1 returns, no investigation was conducted to establish clandestine removal of goods, which is a serious allegation. No statement has been recorded. In those circumstances, the charge of clandestine removal of goods is not sustainable.

Case Title: M/s. Micky Metals Limited Versus Commissioner of Central Excise, Bolpur

Case No.: Excise Appeal No.162 of 2012

Date: 04/07.2023

Counsel For Appellant: N.K.Chowdhury

Counsel For Respondent: S.Mukhopadhyay

Click Here To Read The Order