2010 (9) TMI 1040 - AT - Central Excise

Summary

Issues:
Confirmation of duty demand and penalties for clandestine removal of goods.

Analysis:
The case involved appeals against the confirmation of duty demand and penalties on the appellants for clandestine removal of goods. During a survey by the Income Tax Department, discrepancies were noted in the cash book of the appellants regarding the introduction of a significant amount of money. The Income Tax assessment considered this amount as income, leading to a subsequent audit by the Central Excise Department, which demanded central excise duty on the same amount. The appellants denied any clandestine removal of goods and argued that the cash introduced was to enhance their cash balance, not to evade central excise duty. The appellants contended that the Department did not provide sufficient evidence to prove clandestine removal and relied on a previous Tribunal decision emphasizing the need for proper evidence to establish such offenses.

The Revenue, however, argued that the amount introduced in the cash book was the sale proceeds of goods removed clandestinely, as admitted by the appellants themselves during the Income Tax assessment. The Revenue asserted that since the appellants admitted to having no other source of income apart from manufacturing activities, the introduced cash was linked to the goods manufactured and removed clandestinely. The Revenue contended that no further evidence of clandestine removal was required, given the appellants' admission.

After hearing both sides and examining the submissions and records, the Member (J) found that the cash introduction was through the partner's capital account and that the appellants denied any clandestine removal without central excise invoices. The demand was solely based on the Income Tax assessment without additional evidence supporting clandestine removal, such as procurement details, electricity consumption, or transportation records. As no corroborative evidence was presented to establish clandestine removal, the Member (J) concluded that the demand was not sustainable, leading to the setting aside of the impugned order and allowing the appeals. The judgment was pronounced on 29-9-2010 by Shri Ashok Jindal, Member (J) at the Appellate Tribunal CESTAT MUMBAI.