1999 (2) TMI 670 - AT - Central Excise

Summary

Issues Involved:
1. Alleged manufacture and clearances of aerated water without payment of duty.
2. Alleged clandestine manufacture of 30,000 cases of Soda.
3. Validity of the show-cause notice based on alleged receipt of concentrates.
4. Evidentiary value of the unsigned, unauthenticated statement and typed information.

Summary:

1. Alleged manufacture and clearances of aerated water without payment of duty:
The case arose from an Order-in-Original dated 24.12.1997, confirming a duty demand of Rs. 33,85,416/- for the alleged manufacture and clearances of aerated water (Pepsi and 7-Up) under heading No. 2201.12 of the Central Excise Tariff Act, 1985. The demand also included the alleged manufacture of 30,000 cases of Soda for the period from May 1991 to the issuance of the show cause notice on 28.5.96, invoking the proviso to Section 11A(1) of the Central Excise Act read with Rule 9(2) of Central Excise Rules, 1944. The case was based on intelligence gathered by the Directorate General of Anti Evasion, which led to searches and recovery of certain records from the factory-cum-registered office on 31.8.94.

2. Alleged clandestine manufacture of 30,000 cases of Soda:
The show-cause notice also alleged the clandestine manufacture and removal of 30,000 cases of Soda, without providing any specific details about the materials and methods used for such manufacture.

3. Validity of the show-cause notice based on alleged receipt of concentrates:
The appellants contended that the factory was under lock-out due to labor problems from May 1991, supported by evidence from the Labour Department. They also provided evidence showing that the concentrates were diverted to M/s. Universal Drinks Pvt. Ltd., Nagpur, including letters, consignment notes, invoices, and journal vouchers. The Commissioner rejected these evidences as an after-thought without substantial reasoning. The Tribunal found that the show-cause notice lacked a prima facie basis and was built on assumptions and conjectures without sufficient evidence.

4. Evidentiary value of the unsigned, unauthenticated statement and typed information:
The department's case heavily relied on an unsigned and unauthenticated typed statement found during the search, which allegedly detailed a scheme for clandestine manufacture and removal. The Tribunal held that such a document could not have any evidentiary value and could not be the basis for establishing clandestine manufacture and removal. The Tribunal also noted the lack of evidence regarding the procurement of other necessary raw materials, electricity consumption, and financial transactions to support the allegations.

Conclusion:
The Tribunal concluded that the show-cause notice and the subsequent order lacked a proper foundation and were based on insufficient evidence. The appeal was allowed, and the impugned order was set aside with consequential relief as per law.