2001 (7) TMI 771 - AT - Central Excise

Summary

Issues:
- Allegation of clandestine manufacture and removal of sugar
- Calculation of alleged suppression of production
- Demand of duty and penalty imposition
- Commissioner (Appeals) decision analysis

Allegation of Clandestine Manufacture and Removal of Sugar:
The appeal was filed by the Revenue against the Commissioner (Appeals) orders regarding the confirmation of demand of duty against the respondents based on findings of clandestine manufacture and removal of sugar. The central excise officers suspected that the appellant suppressed the manufacture of sugar. They calculated the alleged suppression of production by multiplying the difference in the value of A.V.M. by the ratio of sugar and molasses found in the report, ultimately raising a demand of duty against the respondents.

Calculation of Alleged Suppression of Production:
The central excise officers calculated the alleged suppression of production by comparing the A.V.M. values reported by the factory and the Chemical Examiner. The difference in values was multiplied by the sugar and molasses ratio from the report. This calculation method led to the allegation that the respondents had manufactured sugar and cleared it without payment of duty, resulting in a demand of Rs. 1,16,013/- and imposition of a penalty of Rs. 20,000/-.

Demand of Duty and Penalty Imposition:
The show cause notice raised a demand of duty against the respondents for allegedly manufacturing and clearing sugar without payment. The Deputy Commissioner confirmed the demand and imposed a penalty. However, the Commissioner (Appeals) set aside this order, highlighting the lack of evidence to support the allegation of surreptitious manufacture and removal. The Commissioner emphasized that clandestine removal requires positive proof, not mere conjecture or presumption, citing relevant legal precedents.

Commissioner (Appeals) Decision Analysis:
In the impugned order, the Commissioner (Appeals) observed that the analytical test report did not show any excess available sugar, despite indicating a lesser quantity of A.V.M. The Commissioner found no logical basis for the conclusion of proportionate extra sugar being made and cleared surreptitiously. The Commissioner emphasized the lack of evidence to support the allegation of surreptitious manufacture and removal, ultimately setting aside the demand and penalty, deeming them unjustifiable. The Commissioner's decision was upheld, rejecting the Revenue's appeal based on input-output calculations and the lack of substantial evidence to support their claims. The respondents' argument that the department's calculation method was flawed and that no evidence supported the alleged clandestine activities was accepted, leading to the rejection of the Revenue's appeal.