2017 (3) TMI 357 - AT - Central Excise

Clandestine removal - there was some shortage of the finished goods in the factory as compared to the production recorded in the RG-1 Register & 11 loose slips were retrieved - Held that - the said 11 loose slips have not been established by Revenue to have been recovered from the record maintained at the manufacturing unit of the appellant as it was on the record that as per the statement dated 13/11/2002 of Shri Amit Kumar Jain, it was very clearly stated by him that the said 11 loose slips did not belong to them and were placed by Officers in the record - no evidence has been brought on record about the procurement of raw materials and the clearances of the finished goods and the purchasers to whom such goods were cleared and how the sale proceedings were recovered and accounted for - allegations in respect of evasion of Central Excise duty to the tune of ₹ 30,57,948/- on the basis of the said 11 loose slips and allegation of evasion of Central Excise duty of ₹ 26,49,514/- on the basis of the said 129 GRs is presumptive. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Allegation of Central Excise duty evasion based on shortage of finished goods and loose slips
- Reliability of evidence from transporters and loose slips
- Imposition of penalty under Rule 26 of Central Excise Rules, 2002

Allegation of Central Excise duty evasion based on shortage of finished goods and loose slips:
The appeals were filed against an Order-in-Original dated 09/04/2007 by the Commissioner of Central Excise, Kanpur. The appellant, engaged in manufacturing M.S. Bars, faced allegations of Central Excise duty evasion amounting to significant sums based on shortages of finished goods and loose slips recovered during investigations. The Show Cause Notice demanded payment of duty and proposed penalties on individuals. The Original Authority confirmed the demand and penalties, leading to the appeals before the Tribunal.

Reliability of evidence from transporters and loose slips:
The appellant contended that the loose slips were not recovered from their factory premises and were placed there by officers to incriminate them. They argued that the evidence from transporters and loose slips was insufficient and unreliable. The Tribunal noted contradictions in statements and lack of concrete evidence linking the alleged evasion to the appellant. They found the allegations presumptive and unsustainable, ultimately setting aside the confirmation of demands based on the loose slips and transporter records. The Tribunal emphasized the need for corroborative evidence and proper documentation to establish allegations of duty evasion.

Imposition of penalty under Rule 26 of Central Excise Rules, 2002:
Regarding the penalty imposed under Rule 26 of Central Excise Rules, 2002, the Tribunal ruled that since there was no proposal for confiscation of goods, the penalty was not legally justified. They modified the Order-in-Original, retaining only a portion of the demand and penalties while setting aside the rest. The Tribunal partially allowed the appeal filed by the manufacturing company and fully allowed the appeals by the individual appellants, granting them consequential relief as per law.

This detailed analysis of the judgment highlights the issues of duty evasion allegations, evidence reliability, and penalty imposition, showcasing the Tribunal's thorough examination of the case and its decision-making process.