2017 (7) TMI 940 - AT - Central Excise

Clandestine removal - evidence - burden to prove - Held that - Since, the onus lies with the Department to prove clandestine removal of the goods has not been substantiated with any iota of evidence, I am of the view that the duty demand confirmed and penalty imposed on the appellant cannot be sustained and the same are liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Central Excise Duty demand on removal of steel scrap
- Reliability of evidence from seized ledger
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944

Central Excise Duty demand on removal of steel scrap:
The appeal was against an order passed by the Commissioner (Appeals) confirming a Central Excise Duty demand against the appellant for removing steel scrap without payment of duty and issuing excisable invoices. The appellant, engaged in manufacturing LPG cylinders, argued that the private ledger seized during an Income Tax Department search operation did not connect them to the scrap removal. The appellant contended that only a few entries in the ledger related to them, and those entries involved payment of Central Excise duty. The appellant highlighted that the proposed penalty against another individual was dropped due to lack of evidence. The Tribunal observed that the authorities did not address the appellant's specific arguments and relied on the adjudication order findings. Since the Department failed to prove clandestine removal with evidence, the Tribunal held that the duty demand and penalty imposed were not sustainable and set them aside.

Reliability of evidence from seized ledger:
The appellant disputed the reliance on a private ledger seized from an individual not connected to their company. The appellant argued that the entries related to them involved payment of Central Excise duty. The Tribunal noted that the authorities did not address the appellant's arguments directly and instead relied on the findings in the adjudication order. The Tribunal emphasized that the Department failed to provide substantial evidence to prove clandestine removal, leading to the decision to set aside the duty demand and penalty.

Imposition of penalty under Section 11AC of the Central Excise Act, 1944:
The appellant challenged the imposition of a penalty under Section 11AC of the Central Excise Act, 1944. The Tribunal found that the Department did not substantiate the clandestine removal allegations with concrete evidence. As the burden of proof lay with the Department, and in the absence of substantial evidence, the Tribunal concluded that the penalty imposed on the appellant could not be upheld. Consequently, the Tribunal set aside the penalty along with the duty demand, ruling in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, finding no merits in the impugned order and setting it aside in favor of the appellant.