2004 (11) TMI 483 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposition based on unaccounted goods found in outward gate passes.
2. Appeal against the Commissioner (Appeals) order on grounds of alleged clandestine removal.

Analysis:
1. The case involved the manufacturing of unwrought zinc by the respondents falling under Chapter 79 of the Central Excise Tariff Act. Central Excise officers discovered four outward gate passes for unwrought zinc ash and zinc ash during a physical verification that were not reflected in the production and clearance records of the respondents. Consequently, a show cause notice was issued demanding duty and proposing a penalty. The Additional Commissioner upheld the demand and imposed a penalty, which was later appealed by the respondents. The Commissioner (Appeals) set aside the original authority's order, leading to the Revenue filing an appeal against this decision.

2. The Revenue contended that the Commissioner (Appeals) erred in accepting the appeal based on the physical verification of stock, as the four outward gate passes indicated unaccounted goods not reflected in statutory records. The party admitted to the non-accountal and clearance of excisable goods on these gate passes. However, the respondents argued that the demand was solely based on these private documents without corroborative evidence. Citing legal precedents, the respondents emphasized the insufficiency of relying on private documents alone to establish clandestine removal. The absence of statements from the gate pass author and recipients, along with lack of further investigation, weakened the Revenue's case.

3. Upon considering both sides' arguments, the judge found no evidence supporting the Revenue's claim of discrepancies in stock balance during verification. The reliance on private gate passes to prove clandestine removal required statements from the document author and recipients, which were lacking in this case. The absence of corroborative evidence led to the rejection of the Revenue's appeal. The judge upheld the Commissioner (Appeals) decision, emphasizing the Revenue's failure to substantiate clandestine removal allegations with concrete proof. Consequently, the appeal was dismissed, affirming the setting aside of the original duty demand and penalty imposition.