2008 (8) TMI 639 - AT - Central Excise

Summary

Issues:
1. Appeal against dropping demand of duty
2. Appeal against sanctioning refund after dropping demand

Analysis:
1. The first issue pertains to the appeal against the dropping of duty demand of Rs. 1,01,136 by the department, alleging clandestine removal of goods by the respondents. The case originated from the recovery of chits/papers from the factory indicating the sale of ball bearings without duty payment or invoices. The Managing Director initially admitted to selling bearings to a specific entity without invoices. However, the buyer later submitted an affidavit denying such transactions and confirming payment for 4 consignments through cheques. The Managing Director, upon further inquiry, retracted his original statement, claiming uncertainty about the buyer's identity. The Assistant Commissioner dropped the proceedings due to lack of corroborating evidence from the department. The Commissioner (Appeals) upheld this decision, leading to the Revenue filing an appeal challenging these orders.

2. The second issue concerns the appeal against the sanctioning of a refund following the dropping of the duty demand. The Revenue argued that the Managing Director's clear admission, the recovery of incriminating documents, and the absence of a retraction from the second statement warranted confirming the demand. The Tribunal noted that the Managing Director's admission, made after the retraction of the initial statement, was crucial. Additionally, the recovery of chits/papers indicating clandestine removal remained uncontested. The Tribunal cited the principle that admissions need not be proven and emphasized the lack of retraction from the second statement. Consequently, the Tribunal upheld the appeal, confirming the duty demand of Rs. 1,01,136 and imposing a penalty of Rs. 26,911 under section 11AC. The liability for these amounts was also confirmed concerning the consequential refund received by the respondents.

In conclusion, the Tribunal's decision favored the Revenue's appeals, emphasizing the significance of the Managing Director's admissions and the unretracted second statement in establishing the duty demand. The lack of corroborating evidence from the department, coupled with the recovery of incriminating documents, supported the Tribunal's ruling in confirming the demand and imposing a penalty.