2018 (1) TMI 368 - AT - Central Excise

Demand of duty along with interest - It has been alleged that the appellant had cleared the goods of different varieties as recorded in DSA under the head For Other Purposes without payment of duty and without issuing Invoices - Held that - the appellant have not produced any evidence in support of their contention. The Commissioner (Appeals) observed that the appellant did not maintain or produce any Test Report towards goods being unfit for consumption before destruction. In any event, the appellant had not produced any evidence in their support of their contention and they have not followed the procedure of law - demand of duty along with interest is justified - appeal dismissed - decided against appellant.

Summary

Issues:
- Duty demand on clearance of goods without payment
- Destruction of goods without proper evidence
- Compliance with Central Excise Rules
- Appellant's contention of perishable nature of goods
- Burden of proof on the appellant

Issue 1: Duty demand on clearance of goods without payment
The case involved the appellant, engaged in manufacturing cakes, facing duty demand for clearing goods without payment. The Adjudicating authority confirmed the duty demand, interest, and penalty, which was upheld by the Commissioner (Appeals). The appellant contended that certain goods returned due to expiry were destroyed on their premises under "For Other Purposes." However, the appellant failed to provide evidence supporting their claim, leading to the rejection of the appeal.

Issue 2: Destruction of goods without proper evidence
The Commissioner (Appeals) noted the lack of evidence from the appellant regarding the unfitness of goods for consumption before destruction. The appellant's failure to follow the procedure of law, including not producing test reports, was highlighted. The Commissioner emphasized the importance of adherence to Central Excise Rules, particularly in cases of returned goods for destruction, which require specific procedures under Rule 21 of the Central Excise Rules, 2002.

Issue 3: Compliance with Central Excise Rules
The Commissioner (Appeals) pointed out that the appellant, working under self-assessment and self-removal procedures, should have followed the provisions of the Central Excise Act and Rules. The failure to intimate the department before returning duty-paid goods for destruction was highlighted, indicating a violation of the law. The Commissioner emphasized the necessity of following proper procedures and obtaining approval for the destruction of duty-paid goods.

Issue 4: Appellant's contention of perishable nature of goods
The appellant argued that their cakes were highly perishable, justifying the return and destruction of expired goods to maintain quality and reputation. However, the lack of evidence supporting the claim of goods being unfit for consumption before destruction weakened the appellant's argument. The Tribunal emphasized the importance of following legal procedures even in cases involving perishable goods.

Issue 5: Burden of proof on the appellant
The Tribunal referred to the case law of CCE Vs. Bajaj Auto, highlighting that while the initial burden lies on the department to show violations, once the department provides evidence, the burden shifts to the appellant to prove innocence. In this case, the Tribunal found that the appellant failed to provide sufficient documentary evidence to prove that the goods returned and destroyed were not cleared clandestinely, leading to the rejection of the appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing the importance of following legal procedures, providing evidence, and complying with Central Excise Rules, especially in cases involving the return and destruction of goods. The lack of proper documentation and failure to prove innocence led to the rejection of the appellant's appeal.