2006 (10) TMI 45 - AT - Central Excise

Clandestine Removal- Evidence - Shortage of raw material and packing material as basis to prove clandestine removal of Pan Masala - It based only on shortage of one raw material and packing material not correct - Statement not assailed by revenue by contrary evidence

Summary

Issues:
1. Appeal against order confirming demand, confiscating goods, and imposing penalties.
2. Findings of the Commissioner (Appeals) setting aside the original order.
3. Submission by the learned DR regarding the whole issue perspective.
4. Submission by the learned Advocate regarding retraction of statement and confiscation of goods.
5. Issue of clandestine removal of pan masala pouches based on shortage of raw materials.
6. Confiscation of excess stock and the proprietor's statement regarding packing for RGI register.

Analysis:
1. The appeal was filed against an order confirming demand, confiscating goods, and imposing penalties. The Commissioner (Appeals) set aside the original order based on lack of corroborative evidence for clandestine removal and improper weighment during stock taking. Consequently, the demand, confiscation, penalties, and redemption fine were all set aside.

2. The learned DR argued that the Commissioner (Appeals) did not consider the issue comprehensively, emphasizing the respondent's admission of raw material shortage due to manufacturing clandestine goods. The submission highlighted that the weighment method based on the weight printed on pan masala pouches was accurate. However, the learned Advocate countered these arguments by presenting a retraction of the statement denying removal without duty payment and justifying the confiscation set aside due to incomplete packing for RGI entry.

3. The main issue revolved around whether the appellant clandestinely removed pan masala pouches solely based on shortages of supari and laminated foil. The judgment noted that pan masala production requires additional ingredients like katha, which were not proven to be short. Therefore, the allegation of clandestine removal solely on the shortage of specific raw materials was deemed legally insufficient.

4. Regarding the confiscation of excess stock, the proprietor's statement clarified that the boxes found short were under packing for RGI entry, with the standard packing being 20 boxes. The absence of contrary evidence to challenge this statement led to the dismissal of the Revenue's appeal, as the incomplete packing for RGI registration was adequately explained.

5. In conclusion, the judgment dismissed the Revenue's appeal, upholding the Commissioner (Appeals)'s decision to set aside the demand, confiscation, and penalties due to lack of substantial evidence supporting the allegations of clandestine removal and incomplete packing for RGI registration. The detailed analysis of the issues highlighted the importance of corroborative evidence and comprehensive consideration in such legal matters.