2016 (3) TMI 1173 - AT - Central Excise

Cigarettes - removal without cover of invoice - the cigarettes in the brand name of the appellant were recovered from one M/s. Shardha Traders but Sh. Ajay Adwani proprietor of Sharddha Traders never named the appellant that they have procured the said goods from the appellant - demand of duty with interest - penalty. Held that - As the appellant unit was in physical control of the Central Excise Department and nothing incriminating was recovered from the appellant and the officer incharge of factory of the appellant were never investigated in that circumstances the charge of clandestine removal of goods is not sustainable. The allegation has been made on the basis of assumption and presumption no statement of the appellant was ever recorded none of the person whose statement were recorded and relied has implicated the name of the appellant - As all the evidence to alleged clandestine removal are absent from the investigation in that circumstances allegation of clandestine removal of goods is set aside. Reliance was placed in the case of MUSK TOBACCO (INDIA) PVT. LTD. Versus COMMR. OF C. EX. LUCKNOW 2011 (11) TMI 570 - CESTAT NEW DELHI where it was held that In the absence of evidence the duty on the basis of third party statement cannot be demanded from the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Demand of duty along with interest from M/s. Rudra Venture Pvt. Ltd. and penalty imposed on both the appellants.

Analysis:
1. The case involved an appeal against an order demanding duty, interest, and penalty from the appellants concerning the recovery of branded cigarettes without proper documentation from a third party's premises.

2. The appellant argued that since no investigation was conducted at their end, relying on statements from third parties for duty demand was unjustified. They emphasized that their unit was under strict control of the Excise Department, and no evidence supported the allegation of clandestine removal of goods by the appellant.

3. The appellant's counsel highlighted the lack of crucial evidence such as the source of raw materials, electricity consumption, transportation details, and financial transactions to substantiate the charge of clandestine removal. They cited relevant tribunal judgments to support their argument.

4. On the contrary, the Revenue stood by the findings in the impugned order, defending the duty demand and penalties imposed on the appellants.

5. After hearing both parties and considering the submissions, the judge examined the evidence. It was noted that the allegations of clandestine removal were primarily based on presumptions, as no incriminating evidence was found at the appellant's premises or against their factory officers.

6. The judge pointed out that statements from third parties did not directly implicate the appellant, and the case against them relied heavily on assumptions. Due to the lack of concrete evidence regarding procurement, manufacturing, financial transactions, and transportation, the charge of clandestine removal was deemed unsustainable.

7. Drawing on precedents, including the Musk Tobacco case and Shrigonda Sahakari Sakhar Karkhana Ltd. case, the judge emphasized the necessity of substantial and reliable evidence in cases of clandestine production and removal. Given the absence of such evidence and the failure to prove the allegations, the impugned order was set aside, and the appeal was allowed with consequential relief.

In conclusion, the judgment highlighted the importance of concrete evidence in establishing charges of clandestine removal and emphasized that allegations based on assumptions and presumptions are not sufficient to demand duty and impose penalties.