2018 (3) TMI 1234 - AT - Central Excise

Clandestine removal - whether all the invoices issued showing the clearance of parts are for the removal of finished goods or some part of finished goods and the remaining parts as such? - Held that - there is no dispute that the respondent was indulging in clandestine removal of finished goods under the guise of parts as such - since the department had no evidence except the 10 invoices and the partner of the respondent firm has given the statement, there is no reason to demand the duty on the entire clearances of the parts treating the same as clearances of finished goods - appeal dismissed - decided against Revenue.

Summary

Issues:
Clandestine removal of finished goods under the guise of parts, dispute over whether all invoices showing parts clearance are for finished goods or a mix, reduction of demand by Commissioner (Appeals) based on lack of evidence.

Analysis:
The case involved a respondent engaged in manufacturing travel goods parts, clearing them to another company under false pretenses to evade central excise duty. The investigation revealed a modus operandi where invoices were manipulated to show parts clearance while actually delivering finished goods clandestinely. A show cause notice was issued, demanding excise duty of ?23,09,251, later reduced to ?9,03,277 by the Commissioner (Appeals).

The Revenue appealed, arguing that all clearances were of finished goods based on recovered parallel invoices. The Assistant Commissioner contended that once the modus operandi was exposed, 100% evidence was unnecessary, citing relevant case laws. The respondent's representative countered, stating that only 10 invoices were found, and the partner admitted to manipulating around 35% of clearances, not all. The Commissioner (Appeals) upheld the demand for 35% of the total.

The Tribunal analyzed the evidence and statements, noting the lack of conclusive proof beyond the 10 recovered invoices. The partner's admission of 35% manipulation was crucial in determining the reduction of demand. Given the absence of additional evidence, the Tribunal upheld the Commissioner's decision, granting the benefit of doubt to the respondent. Consequently, the Revenue's appeal was dismissed, and the impugned order was upheld.