2006 (12) TMI 524 - AT - Central Excise

Summary

Issues involved: Challenge to demand of duty and penalty on unaccounted processed fabrics.

Summary:
The appellants contested the duty demand and penalty imposed on unaccounted processed fabrics. Out of the received grey fabrics, a portion was not shown in records as processed and cleared with duty payment, leading to a discrepancy. The department alleged clandestine removal of fabrics without duty payment.

Upon hearing both parties, the Tribunal found merit in the appellant's argument. It was noted that the burden of proving clandestine clearance was not met by the Revenue. The high shrinkage percentage alone could not establish clandestine clearance. The appellants attributed the shortages to fabric shrinkage during processing, which was not disproved by the department. Citing precedents, it was emphasized that evidence is crucial to establish clandestine clearance, which was lacking in this case.

In light of the above, the Tribunal set aside the impugned order, allowing the appeal of the appellants. The finding of clandestine removal and consequent duty demand were deemed unsustainable and hence overturned.

*(Pronounced in Court on 7-12-2006)*