2016 (2) TMI 986 - AT - Central Excise

Demand - unaccounted income surrendered before the income tax department presuming that the said amount is receivable from the sundry debtors, and dues of goods manufactured clandestinely and cleared without payment of duty - whether these goods have been manufactured by the appellant or not? - Held that - As duty is payable on manufacture of the goods, Revenue have not come up with any positive evidence to show that the appellant has manufactured excisable goods and cleared without payment of duty. In the absence of such evidence, duty cannot be demanded from the appellant. The same view was taken by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA Versus ZOLOTO INDUSTRIES 2014 (3) TMI 788 - CESTAT NEW DELHI , therefore, the duty cannot be demanded from the appellant according the demand of duty along with interest is set aside. As demand of duty is not sustainable, the question of imposing penalty does not arise - appeal allowed.

Summary

Issues:
Appeal against demand of duty and penalty confirmed by Commissioner (A) based on unaccounted income surrendered before Income Tax Authorities.

Analysis:
The appellant appealed against the demand of duty and penalty confirmed by the Commissioner (A) amounting to &8377; 14,00,800/- based on unaccounted income of &8377; 1.70 crore surrendered before the Income Tax Authorities during the Financial Year 2008-09. The show cause notice was issued to demand duty on the surrendered amount treating it as profit from clearance of goods without payment of duty. The appellant contended that no verification was conducted in their factory to establish clandestine manufacture and clearance of goods. The appellant argued that duty cannot be demanded without positive evidence of manufacturing excisable goods without duty payment. The Tribunal noted the lack of evidence by the Revenue to prove manufacturing and clearance without duty payment, citing a similar case precedent.

The Tribunal observed that duty was demanded based on the presumption that unaccounted income was receivable from sundry debtors for goods manufactured clandestinely and cleared without duty payment. However, the Revenue failed to provide concrete evidence of the appellant's involvement in manufacturing excisable goods without duty payment. Relying on a previous case precedent, the Tribunal held that without such evidence, duty cannot be demanded from the appellant. Consequently, the demand of duty along with interest was set aside, leading to the dismissal of penalty imposition due to the unsustainable duty demand. The impugned order was overturned, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal found that the demand of duty and penalty based on unaccounted income surrendered before the Income Tax Authorities lacked substantial evidence of the appellant's involvement in manufacturing and clearing goods without duty payment. The Tribunal emphasized the necessity of positive evidence to support duty demands in such cases, ultimately leading to the setting aside of the duty demand and penalty imposition.