Order Date – 31 March 2023

Parties: Satyam Iron and Steel Company Private Limited Vs The Commissioner, Central Excise and Service Tax – Bolpur 

Facts – 

• The Appellant, Satyam Iron and Steel Company Private Limited, is engaged in the manufacture of excisable goods namely, sponge iron.  
• An audit was conducted during 2014 which ultimately led to the issuance of show-cause notices alleging that there is difference between the annual installed production capacity statement as declared in the ER-7 statement and the ER-1 return and removed the products clandestinely by intentionally evading the payment of Central Excise duty. 

Issue – 

• Whether the appellant manufactured and clandestinely cleared goods without payment of Central Excise duty? 

Order – 

• The Divisional Bench of Hon’ble High Court observed that department has not been able to establish the charge of clandestine removal by any tangible or cogent evidence. The show cause notice was mechanically issued without conducting any enquiry solely based upon audit objection. The documents filed by the assessee along with their reply were ignored. 
• The entire show cause notice has been built up on theory of assumption and presumption solely based upon the installed capacity of the two kilns in the assessee’s factory without noting the factual details placed by the assessee, more particularly the period during which the kilns were shut down and as to how the department was fully aware of the shut down as the intimation given by the assessee were all acknowledged by the department. 
• Further in the earlier audit inspections which were conducted no adverse report was drawn against the assessee even though they had not adopted the very same process. Hence it was held that that the department has failed to discharge the onus cast upon him to prove the charge of clandestine removal. 
• The appeal is allowed, and the order passed by the tribunal as well as the adjudicating authority are set aside.