2008 (7) TMI 216 - AT - Central Excise

Clandestine removal of M.S. rectangular bars - stock taking was not done by department - evidence in the form of loose chits(containing details of sales and clearances of finished goods) found in the factory and a statement of the partner are not adequate as evidence - officers have failed to investigate the case properly and had failed to provide sufficient evidence even to conclude preponderance of probability in favour of the department revenue s appeal rejected

Summary

Issues:
Clandestine removal of goods based on loose chits and partner's statement.

Analysis:
The case involved the discovery of loose chits at the factory premises of the respondent, indicating possible clandestine removal of goods. Central Excise officers alleged evasion of duty amounting to Rs. 1,02,100 based on the loose chits and a statement by the partner. The appellant paid the amount immediately after the search. Subsequently, a show cause notice was issued, but the lower authorities dropped the proceedings citing insufficient evidence from the loose chits and partner's statement. The Revenue appealed this decision.

The Revenue argued that the admission by the partner, coupled with the payment of duty post-search and recovery of loose chits, established the illicit removal of goods. They contended that the department only needed to prove the case on a preponderance of probability basis, citing legal precedents. The respondent's advocate, on the other hand, relied on Supreme Court and Tribunal decisions to challenge the sustainability of the demand based solely on loose entries and partner statements.

After considering both sides' arguments, the Member (T) agreed with the lower authorities that the department failed to establish a case. It was noted that no stock-taking was conducted, and the loose papers' contents were not adequately explained. The partner could not name a single buyer mentioned in the loose papers, and no efforts were made to identify the author of the papers. The lack of proper investigation and insufficient evidence led to the conclusion that the department had not met the required standard of proof. Consequently, the appeal by the Revenue was rejected, and the original decision was upheld.