2003 (4) TMI 601 - AT - Central Excise

Summary

Issues:
1. Allegation of clandestine removal of processed fabrics.
2. Confiscation of dyed cotton fabrics.
3. Reliability of private records and statements as evidence.
4. Imposition of penalty and fine on goods lying in the factory.

Issue 1: Allegation of Clandestine Removal of Processed Fabrics
The Revenue appealed against the dropping of demands for duty on the allegation of clandestine removal of processed fabrics. The investigating authority relied on a statement and a private diary entry by Shri Sampath to book a recovery of duty. However, the Commissioner (Appeals) accepted the argument that the statement was coerced and resiled, and there was no corroborative evidence of manufacture and removal of goods. The Commissioner emphasized that the burden of proof lies with the Department in cases of clandestine removal. It was highlighted that without independent investigation and evidence, the charge of clandestine removal could not be established, citing various legal precedents. The Commissioner concluded that the duty demand was not proven beyond doubt, and hence, could not be demanded.

Issue 2: Confiscation of Dyed Cotton Fabrics
Regarding the confiscation of 2100 liters of dyed cotton fabrics seized within the factory premises, it was argued that there was no intention to evade duty as the goods were not cleared outside the factory. Citing previous Tribunal judgments, it was stated that if no clandestine removal was involved, confiscation and imposition of fines were not justified. The Commissioner agreed with this argument, emphasizing that if goods were within the factory premises and not attempted to be removed clandestinely, confiscation was not sustainable. As the charge of clandestine removal was not proven, the imposition of penalties was deemed unjustified.

Issue 3: Reliability of Private Records and Statements as Evidence
The Revenue contended that private production records and statements by Shri Sampath should be considered as evidence, as they were corroborated. They argued that the production details in the note books were related to the appellant's unit, making them crucial evidence to prove illicit transactions. It was emphasized that the Commissioner's dismissal of these records as rough note books was incorrect. However, the appellant argued that the statements were taken under coercion, and there was no corroboration with regard to the contents noted in the note book. They highlighted the lack of investigation into inputs purchased and final goods sold, as well as power consumption, to support the production claims. The Commissioner held that mere entries in the note book without corroborative evidence were insufficient to confirm the demands, citing various judgments supporting this stance.

Issue 4: Imposition of Penalty and Fine on Goods Lying in the Factory
The Revenue sought restoration of the confiscation and imposition of fines on goods lying in the factory. However, the appellant argued against this, stating that there was no evidence of clandestine removal or intention to evade duty. The Commissioner agreed with the appellant, citing judgments that goods within the factory premises could not be confiscated if not attempted to be removed clandestinely. The Commissioner also noted that the grounds for imposing penalties and fines on such goods were not in accordance with the law. The Commissioner's order was upheld, emphasizing the lack of merit in the Revenue's appeal.

In conclusion, the Commissioner's order dropping the duty demands and dismissing the confiscation and imposition of fines on goods within the factory premises was upheld, emphasizing the importance of corroborative evidence and proper investigation in cases of clandestine removal.