2010 (7) TMI 369 - AT - Central Excise

Clandestine manufacture and removal Excess goods - allegation of clandestine manufacture and removal of the goods by an assessee the initial burden lies upon the Department to prove the same - assessee himself admits certain basic facts which lead to clear conclusion about clandestine manufacture and clandestine removal of the goods from the factory, onus obviously shifted upon the assessee to disprove the facts established by the Department on the basis of admissions made by the assessee

Summary

Issues:
- Appeal against order confirming duty amount, interest, and penalty
- Allegation of clandestine manufacture and removal of goods
- Burden of proof on Department and shift to assessee based on admissions

Analysis:
1. Confirmation of Duty, Interest, and Penalty:
The appellants, engaged in manufacturing Manmade fabrics, were found to have cleared goods without payment of duty during 1999-2001. The Commissioner (Appeals) confirmed the duty amount of Rs. 17,88,262/-, along with interest and penalty. The appeals against this order were dismissed, leading to the present appeals before the Tribunal.

2. Allegation of Clandestine Activities:
The central issue in the case revolved around whether the appellants suppressed production of the final product to remove it clandestinely by showing excess consumption of PU Foam. Both lower authorities found evidence of clandestine manufacture and clearance based on discrepancies in stock and statements obtained during the search. The statement of the partner of the appellants, recorded on multiple occasions, admitted to discrepancies in raw material receipt and unauthorized sales without documentation.

3. Burden of Proof and Shift based on Admissions:
The Tribunal emphasized that the initial burden lies on the Department to prove allegations of clandestine activities. However, when the assessee admits crucial facts that support the allegations, the onus shifts to the assessee to disprove these facts. In this case, the appellants' admissions regarding excess raw material, unauthorized sales, and lack of documentation were crucial in establishing clandestine activities. The Department's experimental verification further supported their findings.

In conclusion, the Tribunal found no grounds for interference as the appellants failed to disprove the evidence presented by the Department, including their own admissions. The appeals were dismissed, upholding the order confirming duty, interest, and penalty.