2008 (4) TMI 587 - AT - Central Excise

Clandestine removal - demand on the basis of entries made in the notebook - corroborative evidences - Held that - the entries in the Notebooks are totally misconceived and inconsistent. Thus, it appears that the entries in the Notebook are vague and not corroborative with the records. The Adjudicating Authority observed that the maintenance of such Notebooks by the Supervisor was reasonably expected. But the Investigating Officers did not examine the Respondent No. 2, at this regard and there is no other corroborative evidence on record to show the clandestine removal of the finished goods on the basis of Note Book. The demand of duty on the basis of a Note Book maintained by the employee, who is not authorized person and is not corroborative with any evidence, is unjust, improper and unreasonable. Demand not sustained - appeal dismissed - decided against Revenue.

Issues:
1. Confiscation of seized goods and demand of duty based on excess quantity found in a truck.
2. Imposition of penalties on both respondents under relevant sections of Central Excise Act and Rules.
3. Dispute regarding authenticity and ownership of a Notebook related to clearance of goods.
4. Allegations of clandestine removal of goods based on entries in the Notebook.
5. Contention regarding the reliability and vagueness of entries in the Notebook.
6. Lack of sufficient corroborative evidence for demanding duty based on the Notebook.
7. Justification for rejecting the appeals filed by the Revenue against the respondents.

Issue 1:
The case involved the confiscation of seized goods and the demand of duty based on excess quantity found in a truck. The Respondent No. 1, engaged in manufacturing Lead and Lead Based Alloy, was availing SSI exemption. Central Excise Officers intercepted a truck with excess quantity, leading to the issuance of a show cause notice proposing confiscation of goods, duty demand, and penalties. The Adjudicating Authority confirmed the duty demand and imposed penalties, which were later set aside by the Commissioner (Appeals), prompting the Revenue to file appeals.

Issue 2:
Penalties were imposed on both respondents under Section 11AC of the Central Excise Act and Rule 26 of the Central Excise Rules. The Adjudicating Authority confirmed the penalties, but the Commissioner (Appeals) set them aside, leading to the Revenue filing appeals challenging this decision.

Issue 3:
A key issue revolved around the dispute regarding the authenticity and ownership of a Notebook found during the investigation, which was purportedly related to the clearance of goods from the factory. The Respondent No. 2 disowned the Notebook, while the Supervisor acknowledged its connection to clearance activities, raising questions about its validity and relevance in the case.

Issue 4:
Allegations of clandestine removal of goods were based on entries in the disputed Notebook. The Adjudication Order computed duty demand using these entries, but the Respondents contested the authenticity and ownership of the Notebook, highlighting discrepancies and lack of evidence to support the claims of clandestine removal.

Issue 5:
Concerns were raised about the reliability and vagueness of entries in the Notebook, with the Respondents arguing that the entries did not align with standard weights of ingots produced in the factory. Detailed examples were provided to illustrate the inconsistencies and questionable nature of the entries, casting doubt on the accuracy and credibility of the Notebook.

Issue 6:
The lack of sufficient corroborative evidence for demanding duty based on the Notebook was a critical aspect of the case. The Adjudicating Authority's reliance on the Notebook maintained by an unauthorized employee, without adequate verification or supporting evidence, was deemed unjust and unreasonable, emphasizing the need for concrete proof to substantiate duty demands.

Issue 7:
The justification for rejecting the appeals filed by the Revenue against the respondents centered on the lack of sustainable evidence to support the duty demand based on the disputed Notebook. The Tribunal found no valid reason to interfere with the Commissioner (Appeals)'s decision, ultimately rejecting the Revenue's appeals and upholding the earlier ruling.

This detailed analysis of the judgment highlights the significant legal issues, arguments presented by both parties, and the Tribunal's reasoning in reaching its decision.

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