2026-VIL-231-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Clandestine removal of goods and demand of duty, interest and penalty based on electricity consumption - DGGI conducted searches at the factory, residence of the director, and premises of the clearing and forwarding agent and supplier, and found excess (unaccounted) stocks of raw material, finished goods, and other materials. The Department alleged clandestine removal of goods by the appellant and issued show cause notices demanding duty, interest and penalties - Whether the demand of duty, interest and penalties on the appellant based on the calculation of alleged clandestine removal of goods using only electricity consumption can be sustained – HELD – The preliminary submission of the appellant is that since the investigation was conducted after the introduction of CGST Act in November 2017, the investigation lacks credibility. However, the savings clause in section 174(2) of the CGST Act, 2017 allows institution of any proceedings under the repealed Act (Central Excise Act, 1944) even after the appointed day of CGST Act. Therefore, on this issue, the submission of the learned counsel is rejected - The allegation of excess production and clandestine removal and consequent demand of duty, interest and penalties cannot be sustained based solely on the calculation using electricity consumption. The calculations in the SCN only considered electricity consumption and did not take into account any other parameters to determine the actual production - all that the figures and calculations show is that if the production of goods in terms of electricity consumption has been as efficient. However, the calculation does not establish that the production has, indeed, been so efficient throughout the period of dispute and part of the goods so produced was clandestinely removed without paying duty - The allegation of excess production and clandestine removal and consequent demand of duty, interest and penalties cannot be sustained and set aside – The impugned order is set aside and the appeals are allowed
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