2015 (8) TMI 1382 - AT - Central Excise

Shortage of stock - clandestine removal or not? - the authorized signatory of the appellant has only admitted shortage of the finished goods and nowhere in the statement he has stated that the finished goods found short, have been clandestinely removed from the factory - Held that - the onus lies on the Department to prove clandestine removal of goods, which has not been satisfactorily discharged - Since the authorized signatory nowhere in his statement had admitted about the clandestine removal of goods, the charges cannot be levelled solely on the basis of shortage detected by the officers during the course of verification of the documents - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged removal of excisable goods without payment of duty and maintaining proper records, appeal against demand of duty, retraction of statement by authorized signatory, evidence of clandestine removal of goods, applicability of legal precedent.

Analysis:
1. The case involved allegations of the appellant removing excisable goods without payment of duty and proper record-keeping, leading to a demand for duty along with penalties. The initial show cause notice was issued based on a shortage of goods found during a verification by Central Excise officers.

2. The appeal by the appellant was allowed by the Commissioner (Appeals) on the ground of limitation without delving into the merits of the case. Subsequently, the Revenue filed an appeal before the Tribunal challenging the Commissioner's order, which was remanded back to the adjudicating authority for further examination, specifically regarding the retraction of the statement by the authorized signatory.

3. The authorized representative for the appellant argued that the statement only admitted a shortage of finished goods, not clandestine removal, and emphasized the lack of evidence proving such removal. The appellant relied on a previous Tribunal decision to support their stance that duty demand cannot be upheld without concrete proof of clandestine removal.

4. On the other hand, the Department reiterated the findings of the impugned order, maintaining their stance on the alleged removal of goods without payment of duty. However, during the proceedings, the Revenue failed to provide substantial evidence corroborating their claim of clandestine removal.

5. The Tribunal, after hearing both parties and examining the records, noted the absence of concrete evidence supporting the Department's claim of clandestine removal. The Tribunal emphasized that the burden of proof lies with the Department, and since they failed to adequately demonstrate clandestine removal, the charges based solely on the shortage detected during verification were deemed insufficient.

6. Consequently, the Tribunal allowed the appeal filed by the appellant, as it found no merits in the impugned order due to the lack of evidence supporting the allegations of clandestine removal. The decision highlighted the importance of meeting the burden of proof in cases involving allegations of clandestine activities to uphold duty demands effectively.