2012 (11) TMI 1028 - AT - Central Excise

Duty demand - Clandestine removal of goods - Burden of proof - Held that - duly demand stand confirmed in respect of shortages detected at the time of visit of the officers read with the statement of Shri Jai Kishan Khatri. The appellants have strongly contended, the manner of weighment of the final product. It is seen that the Revenue has not produced any inventory on record to show that the weightment was actually done and the shortages were not on the basis of average weight system but real and based upon actual weighments. Similarly reliance of the revenue on the statement of the authorized representative cannot ipso facto lead to the inevitable conclusion of clandestine removal of final product especially when there is no variation in the stock of the raw material. - Decided in favour of assessee.

Summary

Issues: Alleged shortage of M.S. bars leading to duty demand and penalty imposition.

Analysis:
1. The case involved the detection of a shortage of M.S. bars during a visit by Central Excise officers at the factory of M/s. Raj Ratan Industries Ltd. The shortage amounted to 29.873 MT, with a duty implication of Rs. 1,28,550.

2. The authorized signatory of the appellant admitted to the shortages and agreed to pay duty, attributing the discrepancy to possible disposal of final products without proper documentation or duty payment by factory employees.

3. Subsequently, proceedings were initiated against the appellant, resulting in a show cause notice and an order confirming the duty demand, interest, and penalty under Section 11AC of the Central Excise Act, 1944. Additionally, a penalty was imposed on an individual under Rule 26 of the Central Excise Rules.

4. The appellant's appeal before the Commissioner (Appeals) was unsuccessful, leading to the current appeal before the tribunal.

5. During the hearing, the appellant's representative and the Revenue presented their arguments.

6. Upon reviewing the impugned order, the tribunal found that the confirmed duty demand was based on the shortages detected and the statement of the authorized representative. The appellant contested the weighment process of the final product, highlighting the lack of concrete evidence from the Revenue regarding the actual weighments and the absence of inventory records to support the shortages.

7. The tribunal emphasized the necessity for the Revenue to establish allegations of clandestine removal with tangible evidence. Citing legal precedents, including a Delhi High Court case and tribunal decisions, the tribunal noted that mere admissions, without substantial corroborating evidence, do not conclusively prove clandestine activities. As the Revenue failed to provide concrete evidence of illegal manufacture or removal of final products, the tribunal set aside the duty demand confirmation and penalty imposition, ruling in favor of the appellant.

8. Consequently, the impugned orders were overturned, and both appeals were allowed, granting relief to the appellant.