2007 (4) TMI 756 - AT - Central Excise

Summary

Issues involved: Alleged clandestine removal of goods, confirmation of duty demand, imposition of penalty u/s 173Q read with Section 11AC.

Confirmation of duty demand: The appellant, engaged in manufacturing textured yarn, was visited by Central Excise officers who found discrepancies in entries between the security room register and statutory records. Despite all stocks tallying, discrepancies led to a demand of duty amounting to Rs. 7,18,828 along with interest and a personal penalty of Rs. 7.20 lakhs, which was confirmed by the Assistant Commissioner.

Grounds of challenge: The appellant contested the order on various grounds, including the failure to consider vital points, non-adjustment of debited amount, lack of corroborative evidence for clandestine removal, and reliance on private note books maintained by the watchman without additional proof. The appellant argued that statements and evidence provided by the department were insufficient to prove clandestine removal beyond doubt.

Appellant's submission: The appellant's advocate argued that all entries in the inward register matched their records, indicating no extra raw material for clandestine activities. They emphasized the lack of further investigation by the Revenue to substantiate the allegations, pointing out discrepancies in vehicle capacities and the need for independent corroboration of the watchman's statements.

Revenue's argument: The Revenue defended the confirmation of demand based on the watchman's detailed statement and entries in the inward and outward registers. They contended that the watchman's statement was comprehensive and could have been cross-examined if necessary, supporting their decision to uphold the duty demand.

Judgment: The Tribunal noted that the Revenue's case relied solely on entries in the private register maintained by the security staff, emphasizing the need for corroborative evidence in cases of clandestine removal. Citing legal precedents, the Tribunal highlighted the requirement for concrete proof beyond assumptions or presumptions. Criticizing the lack of further verification from buyers despite available details, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the appellant.