2006 (11) TMI 472 - AT - Central Excise

Summary

Issues: Allegation of clandestine removal of excisable goods, demand of duty, penalty imposition

The appeal was filed against the OIA No. 200/2004-CE, dated 30-12-2004 passed by the Commissioner of Central Excise (Appeals), Bangalore. The appellants, manufacturers of excisable goods, were alleged to have engaged in clandestine removal of excisable goods. The original authority confirmed a demand of Rs. 9,80,678.85 and imposed a penalty of Rs. 10,000. The period of dispute was from June 1990 to August 1993. The Commissioner (Appeals) upheld the original order, leading the appellants to challenge it strongly.

Allegation of Clandestine Removal:

The learned Advocate for the appellants argued that the allegation of clandestine removal was primarily based on the difference between the production report and RG-1. He contended that the discrepancy arose due to defective goods and the difference in burning loss calculation. He emphasized the lack of corroborative evidence such as raw material purchase records and actual clearance details to prove clandestine removal. Citing precedents, including Meenambal Fire Works Ltd. and I. Gurusamy cases, he highlighted the burden on the department to prove clandestine removal with substantial evidence.

Legal Precedents and Burden of Proof:

The Advocate referenced legal precedents like T.G.L Poshak Corporation and Quality Exports & Chemicals cases to support the argument that mere private accounts or note books cannot be the sole basis for proving clandestine removal. He stressed the necessity of corroborative evidence like receipts of raw materials and manufacturing details to establish such allegations. The Tribunal's stance in various cases emphasized the importance of concrete evidence to substantiate claims of clandestine removal.

Judgment and Decision:

Upon careful review of the case records, the Judge noted that the demand and allegation of clandestine clearance were primarily based on discrepancies in production records. The appellants explained that the difference was due to inaccurate burning loss calculations. The Judge observed the lack of corroborative evidence to support the charges of clandestine removal. Considering the arguments presented and the legal precedents cited, the Judge concluded that in the absence of substantial corroborative evidence, the demand could not be upheld. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

Operative Portion of the Order:

The Judge pronounced the operative portion of the order in open court upon the conclusion of the hearing.