The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) set aside the demand of Rs. 53,38,184 on account of clandestine clearance.
The tribunal also reduced the penalties imposed on the company’s directors, Shri Deepak Keshan and Shri Rahul Nangalia, from Rs. 1,00,000 to Rs. 50,000 each, noting proportionality to the offences committed.
The case originated from an Order-in-Original dated 31-8-2012, passed by the Commissioner of Central Excise, Kolkata-VII, which confirmed various duty demands, interest, and penalties against M/s. Budge Budge Refineries Ltd. and its directors. The company, engaged in the manufacture of refined palm oil ( RPO ) and interesterified vegetable fat was accused of several violations, including undervaluation of goods, irregular availment of exemption benefits, and clandestine removal of fatty acid under the guise of RPO.
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The bench noted that the company had not contested certain demands, including a duty of Rs. 73,241 confirmed for receiving amounts over and above the stock transfer price. The tribunal upheld this demand, along with interest and penalty. Similarly, the tribunal upheld a demand of Rs. 5,68,101 for under-valuation of goods cleared to non-existent dealers, M/s. Mayur Sales Corporation and M/s. Sunrise Enterprise. The tribunal found that the company had already paid the duty but confirmed the demand along with interest and penalty, as the suppression of value had been established.
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The tribunal observed that the demand for clandestine removal was based solely on presumptions and lacked tangible evidence. The adjudicating authority had relied on a comparison between laboratory registers and dispatch registers, but the tribunal found no concrete evidence to support the allegation of clandestine clearance. The tribunal emphasized that allegations of such a serious nature require tangible evidence, which was absent in this case. Consequently, the demand was set aside as unsustainable.
The CESTAT further observed that ‘there is no statements recorded from the buyers of the clandestinely cleared goods. with some details of illicit manufacture and clearance. The department must have brought proof of actual transportation of goods, cleared without payment of duty. ‘
In its final order, the CESTAT disposed of all appeals, upholding certain demands while setting aside others due to lack of evidence.
The Kolkata ITAT, comprising Ashok Jindal ( Judicial Member ) and K. Anpazhakan ( Technical Member ) held that the allegation of clandestine removal of goods is not sustainable.
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