2009 (2) TMI 622 - AT - Central Excise

Summary

Issues involved: Alleged clandestine removal of goods, demand of payment, penalty imposition based on input-output ratio.

Summary:

Alleged Clandestine Removal of Goods:
The Appellate Tribunal CESTAT, New Delhi, heard an appeal filed by the Department regarding the confirmation of a demand of Rs. 29,997/- along with interest and penalty on the respondent for allegedly clearing biris clandestinely. The original authority upheld the demand based on the alleged excessive use of raw materials, leading to a discrepancy in the input-output ratio. However, the Commissioner (Appeals) emphasized the need for substantive evidence to prove clandestine removal, stating that a mere change in the tobacco ratio does not establish such wrongdoing. The Tribunal noted that the alleged excess use of raw materials was not significant enough to justify the demand, especially considering the lack of evidence indicating unaccounted production and clandestine removal. Consequently, the Commissioner's decision in favor of the assessee was deemed appropriate, and the appeal by the Department was dismissed.

Payment Demand Based on Input-Output Ratio:
The original authority's decision to demand payment from the respondent was primarily grounded in the discrepancy between the input and output ratios of raw materials used in the production process. However, the Tribunal found this justification lacking, as the alleged excess quantity of raw materials used over a two-year period did not align with the substantial demand imposed. The absence of additional evidence supporting unaccounted production and clandestine removal further weakened the Department's case. As a result, the Commissioner (Appeals) rightfully ruled in favor of the assessee, highlighting the lack of merit in the Department's appeal and ultimately dismissing it.