2001 (9) TMI 1151 - AT - Central Excise

Summary

Issues:
Demand of duty confirmed based on comparison of figures in financial accounts and statutory records, challenge on merits and limitation, identical demands for earlier periods, explanation of discrepancies in figures between financial accounts and RG-1 register, onus of proving clandestine manufacture and clearance on Revenue, sufficiency of evidence, limitation period for issuing show cause notice.

Analysis:

1. Demand of Duty and Penalty:
The judgment addresses the confirmation of duty demand against the appellants and the penalty imposed on the grounds of clandestine removal, which were determined by comparing the figures in the Annual Financial Accounts and the entries in the statutory records. The appellant firm contested the order both on merit and limitation, with the period in question being from 1985-86 and the show cause notice issued in July 1988.

2. Previous Tribunal Order:
The Tribunal referred to a previous order where identical demands were made against the appellants for earlier periods. The Tribunal considered the appellants' explanation regarding the discrepancies in figures between the production and clearance statistics compiled by the PPC department and the records maintained for Central Excise purposes. The Tribunal acknowledged the differences in compilation methods and held that the demand based on these discrepancies could not be sustained.

3. Onus of Proof and Limitation:
The Tribunal emphasized that the onus to prove clandestine manufacture and clearance lies with the Revenue and must be supported by sufficient evidence. In this case, the Tribunal found that there was no evidence to suggest that the appellants engaged in excess clearances without paying duty. The Tribunal accepted the appellants' explanation for the differences in figures and ruled that the demand for duty was not justified. Furthermore, the Tribunal agreed with the appellants' argument that the demand was time-barred as the show cause notice was issued after the circulation of the annual financial accounts, indicating no suppression on the part of the appellants to warrant an extended limitation period.

4. Decision and Relief:
Based on the previous Tribunal order and the findings in this case, the impugned order was set aside, and the appeal was allowed in favor of the appellants. The Tribunal granted consequential reliefs to the appellants, concluding that the demand of duty and penalty were not sustainable given the explanations provided and the lack of evidence supporting clandestine activities.

This comprehensive analysis of the judgment highlights the key issues addressed, the arguments presented by the parties, and the Tribunal's reasoning leading to the final decision in favor of the appellants.