2010 (2) TMI 1144 - AT - Central Excise

Summary

Issues Involved:
1. Sustainability of duty levy on alleged clandestine removal of goods.
2. Burden of proof and preponderance of probability.
3. Validity of penalty imposition.

Summary:

1. Sustainability of Duty Levy on Alleged Clandestine Removal of Goods:
The Revenue's grievance was against the order passed by the Commissioner (Appeals) which held that the levy of duty of Rs. 1,74,053/- on 395 cartons of tobacco product found during a search on 12-2-2005 was not sustainable on mere presumption of clandestine removal. The adjudicating authority observed that the investigation conducted on 13-2-2005 and the statement recorded from Shri Krishna Bir Singh established a shortage of 395 cartons of Bandar brand tobacco. Singh, an authorized representative, stated he could provide a satisfactory answer after studying the production and sale records. However, the adjudicating authority held that the shortage amounted to clandestine removal, liable to duty, penalty, and interest.

2. Burden of Proof and Preponderance of Probability:
The appellate authority found that the adjudicating authority had presumed clandestine removal without sufficient evidence, thus granting relief to the respondent. The Revenue argued that the respondent failed to inform the investigating agency about the letter dated 14-2-2005 and did not provide an explanation for the shortage. The Revenue contended that the onus of proof shifted to the respondent after the recorded statement on 13-2-2005, which promised to explain the discrepancy. The Tribunal noted that the respondent did not inform the investigating agency about the letter or invite them to verify the stock, thus failing to discharge their burden of proof. The Tribunal held that the preponderance of probability favored the Revenue, and the shortage indicated clandestine removal.

3. Validity of Penalty Imposition:
The Tribunal observed that the respondent's silence and failure to provide an explanation demonstrated an intention to prevent the investigation. The Tribunal emphasized that the burden of proof shifted to the respondent after the Revenue discharged its initial onus. The Tribunal concluded that the respondent's conduct indicated suppression of facts related to the 395 cartons, justifying the imposition of penalty. The Tribunal restored the order-in-original, confirming the duty liability, interest, and penalty, and set aside the first appellate order.

Conclusion:
The Tribunal allowed the Revenue's appeal, restoring the original order and confirming the duty, interest, and penalty on the respondent for the clandestine removal of 395 cartons of tobacco product.