Commissioner of Central Excise & Service Tax Vs Argasen Sponge (P) Ltd (CESTAT Kolkata)
CESTAT Kolkata reviewed the appeal by the Revenue against Agrasen Sponge Pvt Ltd (ASPL) regarding alleged clandestine removal of sponge iron without payment of Central Excise duty. The case hinged on discrepancies in input-output ratios for raw materials and electricity consumption. The Revenue argued that the production ratios deviated significantly from industry norms established by technical consultants. It estimated that ASPL underreported production and clandestinely removed 16,436.71 MT of sponge iron, evading duties amounting to ₹1.83 crore.
The adjudicating authority dismissed the charges, citing insufficient corroborative evidence. While the department relied heavily on theoretical norms for production, the Tribunal highlighted the absence of tangible evidence such as transportation records or financial trails. The authority noted variations in raw material quality and expert opinions, which rendered the calculations speculative. It also emphasized that allegations of clandestine removal, being quasi-criminal, require conclusive proof. Supporting ASPL’s defense, the Tribunal ruled that duty demands cannot be based solely on estimates and upheld prior judicial precedents favoring actual production records over theoretical assumptions.
Respondent was represented by Mr. Kartik Kurmy & Ritika Kurmy, Advocates
FULL TEXT OF THE CESTAT KOLKATA ORDER
