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2006 (12) TMI 277 - AT - Central Excise
Issues:
Clandestine removal of goods, duty demand based on shortage of stock, burden of proof on Revenue. Analysis: The case involved the issue of clandestine removal of Zee Brand Gutkha and Pan Masala by the respondents, who were found to have a shortage of Printed Laminate Rolls (PLR) during a visit by departmental officers. The Managing Director of the company admitted to the shortages but could not explain them fully. The department issued a show cause notice proposing a duty recovery based on the assumption that the shortage of PLR could produce a specific quantity of Zee Gutkha pouches. The Commissioner (Appeals) set aside the duty demand due to lack of tangible evidence of clandestine removal. The judge noted that the entire case relied on the statement of the Managing Director, who only admitted that a certain quantity of Zee Gutkha pouches could be manufactured from the shortage of PLR, without confessing to any actual clandestine production or removal. The judge emphasized that the admission of a possibility of excess pouches being cleared did not conclusively prove that those pouches contained Gutkha. Moreover, there was no shortage detected in other major raw materials like betel nut, lime powder, and tobacco. The balance sheet clearly showed the quantities of these materials. As the Revenue failed to provide sufficient evidence to establish clandestine production and clearance of Gutkha, the burden of proof was not met. Consequently, the judge upheld the decision of the lower appellate authority to drop the duty demand, stating that the material on record was inadequate to prove the allegations. In conclusion, the appeal by the Revenue was rejected, and the impugned order was upheld by the judge, emphasizing that without concrete evidence of clandestine removal, the duty demand could not be sustained. The case highlighted the importance of meeting the burden of proof in establishing allegations of clandestine activities in the manufacturing and clearance of goods.
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