2006 (7) TMI 450 - AT - Central Excise

Clandestine manufacture and removal - aerated waters - entire case of the Revenue is based upon the standard input output norms - HELD THAT - It is seen that the entire allegations against the appellant are that there is a shortfall in the production meaning thereby that they have produced less number of bottles than the standard input output norms - the above cannot be made the basis for confirmation of demand of duty. If there is shortfall in production Revenue cannot confirm demand of duty in respect of goods not produced by the assessee. There is no other evidence on record showing that the appellants have cleared the said goods clandestinely. The entire case of the Revenue is based only on inferences involving unwarranted assumptions and cannot be upheld. Reliance has been placed on the Hon ble Supreme Court decision in the case of TRIVENI RUBBER AND PLASTICS VERSUS COLLECTOR OF C. EXCISE COCHIN 1993 (3) TMI 124 - SUPREME COURT . However it is found that the issue before the Hon ble Supreme Court in that case was all together different and was relatable to the excess production than the ceiling limit which the Hon ble Court found was based upon lot of evidence in the shape of the statements of the various persons and on finding of fact of doctored of accounts. The Hon ble Supreme Court observed that in a case where the accounts are found fabricated and untrue the figures of raw material supplied or the particulars of labour employed may not be available. As already held that there is not even an iota of evidence in the present case it is found that ratio of the above decision does not apply to the facts and circumstances of the present case. The impugned order is set aside - appeal allowed.

Summary

Issues:
Allegations of clandestine manufacture and removal of aerated waters, shortfall in production yield, duty demand based on theoretical calculations, onus of proving clandestine removal on Revenue, lack of tangible evidence, comparison with decisions in similar cases.

Analysis:
The appellants, engaged in manufacturing aerated waters, faced duty demand allegations for clandestine activities based on verifications and statements. They argued that standard output norms are ideal and subject to variations due to various factors affecting production efficiency. The Commissioner observed a shortfall in production yield and held the appellants liable for duty evasion due to partial recording of production and clearance without payment. The appellants contested the allegations, emphasizing factors contributing to loss and wastage during production.

The Tribunal noted that the Revenue's case relied solely on standard input-output norms, and the Commissioner's reference to production shortfalls implied duty liability for non-achievement of standard yield, which was not legally sound. Citing legal precedents, the Tribunal highlighted the necessity of tangible evidence to prove clandestine activities, emphasizing the onus on the Revenue to provide such evidence. The Tribunal concluded that mere production shortfalls cannot be the basis for confirming duty demand without concrete proof of clandestine removal.

Additionally, the Tribunal referenced a similar case involving another unit of the same appellant, where duty demand allegations were vacated considering factors like loss and wastage during production. The Tribunal distinguished a Supreme Court decision relied upon by the Revenue, emphasizing the lack of evidence in the present case compared to the case cited. Ultimately, the Tribunal set aside the duty demand, ruling in favor of the appellants due to the lack of substantial evidence supporting the allegations.

In conclusion, the Tribunal emphasized the importance of tangible evidence in proving allegations of clandestine activities, highlighting the necessity for concrete proof rather than relying solely on theoretical calculations or assumptions. The decision underscored the legal principle that duty demands cannot be confirmed based on production shortfalls alone without corroborative evidence of clandestine removal, ensuring a fair assessment of duty liabilities.