2014 (7) TMI 149 - AT - Central Excise

Clandestine removal of goods - excess generation of waste on manufacture of bottles - Held that - Revenue s entire case is based upon the sole basis of generation of excess plastics scrap at the time of manufacture of plastic bottles. Otherwise, there is virtually no evidence to reflect upon the manufacture of the mineral water bottles or transportation of the same or clearance of the same to identify the buyers. The charges of clandestine removal cannot be upheld on the basis of assumptions and presumptions - Following decision of Acqua Minerals Ltd. Vs. CCE 2004 (7) TMI 562 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues: Allegations of excess wastage in the manufacture of plastic bottles leading to clandestine removal of pet bottles for manufacturing mineral water.

Analysis:

1. Allegations of Excess Wastage:
- The Revenue alleged that the appellant had manufactured pet bottles by showing higher wastage than actual, leading to the use of these pet bottles for manufacturing mineral water clandestinely.
- The appellant explained that the wastage occurred during the manufacture of pet bottles and filling them with water. They maintained that such wastage was recorded in their statutory records without any objection from the department.
- The Revenue relied on statements from job workers and the appellant's representative, claiming that normal wastage during pet bottle manufacture is around 0.5% to 1%. They also alleged the sale of excess plastic waste without identifiable buyers.
- The appellant's advocate argued that 10% of the plastic scrap sale was to a manufacturing unit, which was properly recorded in their Central excise records, but no investigation was conducted at that unit's end.

2. Lack of Concrete Evidence:
- The entire case against the appellant was based on the assumption of excess plastic scrap generation during bottle manufacture. However, there was a lack of evidence regarding the manufacture, transportation, or clearance of mineral water bottles and the identification of buyers.
- The Tribunal referred to a similar case involving the appellant's sister concern, where it was held that duty demands cannot be sustained based on assumptions and presumptions without concrete evidence.
- The Tribunal emphasized that the appellant had reported actual wastage of inputs, and there was no evidence to prove that the reported wastage was false. The demand was considered time-barred, and penalties were not justified.

3. Decision and Precedent:
- Following the precedent set in the case of Acqua Minerals Ltd. Vs. CCE, where duty demands were rejected due to lack of evidence and reliance on assumptions, the Tribunal in this case found no merit in the Revenue's contentions.
- The impugned orders were set aside, and the appeal was allowed in favor of the appellant, providing consequential relief.

In conclusion, the judgment highlighted the importance of concrete evidence in establishing duty demands and rejected allegations based solely on assumptions and presumptions. The appellant's consistent reporting of wastage in statutory records, along with the lack of evidence supporting clandestine removal, led to the dismissal of the Revenue's claims. The decision underscored the need for factual substantiation in tax disputes to uphold the principles of fairness and justice.