2015 (11) TMI 598 - AT - Central Excise

Duty demand - Clandestine removal of goods - Lack of evidence - Held that - After proper analysis of the entire case matter, the Commissioner (Appeals) has passed a reasoned and speaking order holding that the method of verification of stock by the Central Excise Officers was not proper and since the stock in process was not actually verified and the quantity declared by the proprietor of the Respondent company as stock in process was accepted by the officers of the Department, the duty liability cannot be fastened against the Respondent in absence of any plausible evidence that the goods have been removed from the factory. I also find from the grounds of appeal, that the findings of the Commissioner (Appeals) have not been contested especially by producing evidence that the Department has carried out the investigation and verified the records of the Respondent by themselves, and upon proper verification, the shortage quantity of the disputed goods were detected. Since, the duty demand in the Adjudication Order has been confirmed solely based on the statement of the proprietor who admitted that the stocks of the disputed goods were 25 Ton approximately and no proper accounts were maintained, the demand cannot be confirmed for mere non-maintenance of records and more particularly, in absence of any proof regarding clandestine removal of such goods. - Decided against Revenue.

Issues:
1. Appeal against the order passed by the Commissioner (Appeals) regarding duty demand and penalty imposition based on discrepancies in stock verification.
2. Contention by the Revenue that duty demand should be upheld due to shortage quantity of goods found during inspection.
3. Evaluation of the method of stock verification by Central Excise Officers and acceptance of stock in process quantity declared by the Respondent.
4. Confirmation of duty demand solely based on the statement of the proprietor without concrete evidence of clandestine removal of goods.
5. Determination of duty liability based on non-maintenance of proper records and the imposition of penalties.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI pertains to discrepancies found during stock verification at the factory of the Respondent, leading to a duty demand and penalty imposition. The Commissioner (Appeals) set aside the duty demand and reduced the penalty, citing lack of credible evidence of clandestine removal of goods and improper stock verification methods by Central Excise Officers. The Revenue contested this decision, arguing that the duty demand should stand due to shortages in Menthol 97% and DMO 20%. However, the Tribunal found that the Commissioner (Appeals) provided a reasoned order, highlighting flaws in the stock verification process and the absence of concrete evidence supporting the duty demand.

The Tribunal noted that the duty demand was primarily based on the proprietor's statement regarding stock quantities, as no independent verification or evidence of clandestine removal was presented by the Revenue. The lack of proper records maintenance was acknowledged, but it was deemed insufficient to confirm duty liability without specific allegations and substantial evidence of goods removal. The Tribunal emphasized that non-maintenance of records could lead to penalties but should not solely justify duty demand without proof of wrongdoing. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the impugned order and emphasizing the importance of substantial evidence in duty demand cases.

In conclusion, the Tribunal's decision underscores the necessity of concrete evidence to support duty demands, especially in cases where discrepancies arise during stock verification. The judgment highlights the significance of proper investigation procedures and the requirement for specific allegations backed by substantial proof to establish duty liability, ensuring fair treatment of taxpayers in excise matters.

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