CESTAT quashes Excise Duty Demand on Clandestine Clearance of Sponge Iron on ground of Absence of Corroborative Evidence [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand on the clandestine removal of sponge iron on the grounds of absence of corroborative evidence. 

Aryan Ispat and Power Pvt. Ltd, the appellant assessee was a manufacturer of Sponge Iron, and the manufacture of 1 MT of Sponge Iron requires 1.67 MT to 2 MT of Iron Ore, 2 MT of Coal, and 100 kg of dolomite. 

The assessee appealed against the order passed by the adjudicating authority for confirming the demand on undeclared manufactured sponge iron clandestine clearance without payment of Excise Duty to the extent of Rs.2,59,58,417/-. 

K. Kurmy and D. Dutta, the counsels for the assessee contended that there was no evidence brought in towards the alleged excess purchase and payment of the raw materials like Iron ore, Coal, and Dolomite. 

Similarly, even in this case of the alleged sale of the finished goods, no evidence whatsoever had been brought in concerning receipt of cash payment for such a huge quantity of the alleged sale of 11089.730 MT of Sponge Iron. 

P K Ghosh, the counsel for the department contended that the estimated production had been calculated as per the formula which was being adopted by the assessee and the demand raised was as per the law and liable to be sustained. 

The Bench observed that in the entire investigation, the Department had not brought out any evidence of excess procurement of coal and dolomites and since the coal was bought from the coal mine, proper records were kept both by the vendor as well as by the receiver. Such a huge quantity of coal could not have been bought by way of cash and no evidence of the deployment and movement of hundreds of vehicles to transport such a huge quantity of coal and dolomite. 

The two-member bench comprising R Muralidhar (Judicial) and Anpazhakan (Technical) quashed the excise duty demand against the assessee while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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