2004 (3) TMI 524 - AT - Central Excise

Summary

Issues:
Challenge to confirmation of demand of duty and imposition of personal penalty based on waste generation during the manufacture of Branded Chewing Tobacco.

Analysis:
The appellant contested the demand of duty and penalty due to the inability to explain the presence of waste generated during the manufacturing process of Branded Chewing Tobacco. The order was based on the shortage of waste recorded in the balance during an officer's visit. The appellant argued that they maintained proper records of waste generation and filed returns, which were being reviewed by Central Excise officers. The appellant clarified that the waste and scrap, once recorded, were of no use to them and were disposed of as garbage. They emphasized that there was no obligation to retain such waste in the factory as it was neither sold nor accounted for. The appellant's representative argued that the absence of waste during the officer's visit did not signify clandestine manufacturing or removal of the tobacco without payment of duty, especially in the absence of concrete evidence supporting such claims.

The Revenue, represented by Shri J.R. Madhiam, supported the original order, highlighting the shortage of waste as the basis for the demand of duty and penalty.

Upon reviewing the submissions, the judge noted that the entire case revolved around the shortage of waste in the factory premises. The Commissioner (Appeals) acknowledged the lack of evidence demonstrating that unaccounted raw materials were used for manufacturing tobacco removed without duty payment. However, the Commissioner upheld the original order by pointing out the appellant's failure to prove the presence of the recorded waste in the factory. The judge emphasized that the appellant was not legally obliged to retain the waste indefinitely once it was documented and verified. The mere absence of waste during the officer's visit was deemed insufficient to prove clandestine manufacturing and removal without additional tangible evidence. The judge emphasized that the burden of proving clandestine activities rested on the Revenue, requiring substantial and legal evidence, which was lacking in this case. Consequently, the judge found no merit in the impugned order and allowed the appeal, providing relief to the appellant.