2016 (9) TMI 884 - AT - Central Excise

Clandestine removal of dutiable goods - Imposition of penalty - show cause notice was based on the presumption about the figures mentioned on the loose sheets - neither admission from any customer received nor any evidence do have with the department about the details on the loose slips being that related to proceeds of goods cleared clandestinely without payment of duty - Held that - it is found that in none of the statements there was any admission that the data recorded on the loose sheets, was related to the value of the goods cleared clandestinely. There is force in the argument of the appellants that department did not compare the data with the data related to clearances of goods on which duty was paid and the goods manufactured by them which did not attract duty. We, therefore, find that the show cause notice is based on presumption. Hence, the subject of cause notice is not sustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
- Allegations of clandestine removal of dutiable goods without payment of duty
- Imposition of penalty on company officials
- Validity of show cause notice and findings of the Original Authority
- Admissibility of evidence and statements in the case

Analysis:

Allegations of Clandestine Removal:
The case involved M/s Super Cassettes Industries Ltd. being accused of clandestine removal of dutiable goods based on loose papers found during a search. The Original Authority upheld the allegations, imposing penalties and confirming demands. However, the appellants challenged these findings, arguing that no concrete evidence linked the loose slips to clandestine clearances. The Tribunal agreed, noting the absence of admissions or corroboration from customers or functionaries. They emphasized the lack of comparison between data on the slips and duty-paid goods, deeming the show cause notice unsustainable due to being based on presumption.

Imposition of Penalty:
The Original Authority imposed penalties on company officials, including the Director and Factory Manager, for their alleged involvement in the clandestine clearances. The appellants contested these penalties, asserting that the evidence was insufficient to establish their culpability. The Tribunal, after considering the arguments and examining the statements and annexures, found that the penalties were unjustified due to the lack of concrete evidence linking the officials to the alleged misconduct.

Validity of Show Cause Notice and Original Authority's Findings:
The appellants raised multiple grounds challenging the validity of the show cause notice and the findings of the Original Authority. They argued that the demand was based on imaginary grounds, presumption, and assumptions without concrete details of the goods manufactured or clear evidence of clandestine activities. The Tribunal concurred, setting aside the Order-in-Original and allowing the appeals due to the unsustainable nature of the show cause notice and the lack of substantial evidence supporting the allegations.

Admissibility of Evidence and Statements:
Throughout the case, the admissibility and reliability of evidence and statements were crucial. The Tribunal highlighted the absence of admissions regarding clandestine clearances in statements and the failure of the department to compare data on the loose slips with duty-paid goods. This lack of concrete evidence led the Tribunal to conclude that the show cause notice was based on presumption rather than substantiated facts, ultimately resulting in the appeals being allowed and the impugned order being set aside.