2006 (1) TMI 415 - AT - Central Excise

Summary

Issues: Confirmation of demand of duty against the appellant company for alleged clandestine removal of biris.

Summary:
The Commissioner of Central Excise confirmed a duty demand of Rs. 5,25,420.60 against the appellant company, a biri manufacturer, based on findings of clandestine removal. Central Excise Officers found excess biris in the Proprietor's Residential Premises, adjacent to the factory, leading to initiation of proceedings alleging clearance of 14.41 crores of biris in excess of statutory records. The impugned Order confirmed the demand and imposed a penalty of Rs. 2,000.

The appellant contended that besides entries in a private register, there was no other evidence of clandestine activities. It was argued that the factory was under physical control, making clandestine activities implausible. Lack of statements or worker examinations, absence of raw material procurement evidence, and reliance on Tribunal decisions were highlighted to shift the onus to the Revenue to prove clandestine activities.

The Revenue, represented by Shri A. Hore, reiterated the adjudicating authority's reasoning, emphasizing the private record entries as indicators of biri removal without duty payment.

Upon review, the Tribunal found insufficient evidence beyond the private record entries to establish clandestine activities by the appellant company. Citing precedents, including the case of Kirtibhai Maganbhai Patel v. Commissioner of Central Excise, the Tribunal ruled that mere register entries were inadequate to prove clandestine manufacture and clearance. Given the lack of tangible evidence, the Tribunal extended the benefit of doubt to the appellant company, setting aside the impugned Order and granting consequential reliefs.

The appeal was allowed in favor of the appellant company, with the Tribunal finding no substantiation of the charge of clandestine removal, thereby overturning the duty demand and penalty.