2012 (10) TMI 2 - AT - Central Excise

Clandestine removal alleged that appellant is not able to explain regarding the clearance of 66, 826 pieces of apparels i.e. the difference between the apparels declared and the apparels entered in the RG-1 register - appellant has contended that what they have declared on 26-5-2003 is the stocks as on 1-4-2003. From the above submission it is clear that the contention of the appellant is that the stock was as on 1-4-2003 and the declaration was made to this effect on 26-5-2003 - Held that - Charge of clandestine removal is to be established by the department - no efforts have been made by the department to prove the allegation of clandestine removal or to find out any corroborative evidence viz. movement of final product from the factory receipt of payment or any inculpatory statement etc. The charges of clandestine removal cannot be proved on conjectures and surmises in favor of assessee

Summary

Issues:
Alleged clandestine removal of goods; Failure to explain discrepancies in stock declaration; Upholding of lower adjudicating authority's order by Commissioner (Appeals); Burden of proof on the appellant.

Analysis:
The appellant, engaged in manufacturing Ladies Undergarments, appealed against an order upholding the lower adjudicating authority's decision regarding alleged discrepancies in stock declaration. The department noted differences in declared finished goods, inputs, and packing materials, leading to suspicions of clandestine removal. The appellant had availed transitional credit but failed to explain the discrepancy between declared stocks. The Commissioner (Appeals) rejected their appeal for non-compliance with deposit conditions. The Tribunal remanded the case for fresh consideration with a pre-deposit requirement. The appellant contended that discrepancies arose due to non-excisable goods cleared without duty payment, supported by their Profit and Loss account entries. The department alleged clandestine removal without concrete evidence. The Tribunal emphasized the burden of proof on the department in establishing clandestine removal, citing precedents.

The appellant argued that discrepancies were due to non-excisable goods cleared without duty payment, supported by their account entries. The department failed to provide concrete evidence of clandestine removal, shifting the burden of proof to the appellant. The Tribunal stressed the department's obligation to prove clandestine removal with clear evidence, as seen in previous decisions. The Commissioner (Appeals) failed to consider the appellant's explanations, leading to the appeal's success.

The Tribunal overturned the Commissioner (Appeals)'s decision, highlighting the lack of evidence supporting clandestine removal allegations. The appellant's contentions regarding non-excisable goods cleared without duty payment were supported by their account entries. The burden of proof remained on the department, requiring concrete evidence to establish clandestine removal. The Tribunal's decision emphasized the necessity of corroborative evidence in such cases, ultimately allowing the appellant's appeal.