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2023 (11) TMI 748 - AT - Central ExciseClandestine removal - undeclared production - unexplained income of Rs.1.00 crore - onus/burden to prove - HELD THAT - On perusal of the show cause notice as well as Order-in-original that the impugned order is based only on the ground that there was unexplained income of Rs.1.00 crore which was detected by the income tax authorities and the Department has presumed that aforesaid income must have been the result of undeclared production and clandestine removal of excisable goods. Further, it is noted that if the Department has raised duty demand, then the onus of proving excess production and clandestine removal of excisable goods is on the Department. It is also noted that the impugned order is prima facie based on assumption and presumption and there is no evidence which may suggest excess production or clandestine removal of excisable goods by the appellant. It is found that in the case of M/S. OSCAR REMEDIES PVT. LIMITED, SHRI NAVDEEP DHINGRA, DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE ST, PANCHKULA 2017 (7) TMI 404 - CESTAT CHANDIGARH , this Tribunal on identical facts relying upon the decision of VARDHMAN CHEMTECH LIMITED VERSUS CCE, CHANDIGARH 2016 (7) TMI 1320 - CESTAT, CHANDIGARH has allowed the appeal of the appellant and set-aside the demand. The impugned order is not sustainable in law and the same are set-aside - Appeal allowed.
Issues involved:
The judgment involves the confirmation of duty demand, imposition of penalty under Section 11AC of the Central Excise Act, 1944, and penalty on a partner of the firm. Confirmation of Duty Demand: The appellant, engaged in manufacturing 'structural material and boiler parts,' faced a demand for central excise duty of Rs. 2,13,47,150/- due to miscellaneous income of Rs. 1.00 Crore not accounted for in the central excise duty calculations. The department believed this income was generated from sales/clearances of manufactured goods, leading to the duty demand. The Commissioner confirmed the demand along with interest and penalty, which was challenged in the appeals. Appellant's Arguments: The appellant's counsel argued that excise duty is payable on the manufacture and clearance of goods, emphasizing the lack of evidence regarding the production and clearance of goods by the appellant. They contended that surrendered income before Income Tax Authorities cannot be the basis for excise duty demand, citing relevant court decisions that support this stance. Department's Defense: The Department defended the duty demand, stating that the undisclosed profit indicated clandestine production and removal of excisable goods. The partner of the firm failed to provide a satisfactory explanation for the source of the income, leading to the confirmation of the duty demand. The Department relied on the partner's statement and relevant legal precedents to support its position. Judgment and Analysis: Upon review, the Tribunal found that the duty demand was based on presumption and assumption without concrete evidence of excess production or clandestine removal of goods. Citing previous decisions, the Tribunal highlighted that duty cannot be demanded solely based on income surrendered to tax authorities without evidence of manufacturing and clearance of excisable goods. The Tribunal set aside the impugned order, noting the lack of merit and sustainability in law, ultimately allowing the appeals of the appellant. Significant Legal References: The judgment referenced various legal precedents, including Commissioner of C. Ex. Vs. Mayfair Resorts, Girdhari Lal Nannelal Vs. The Sales Tax Commissioner, and other relevant cases that supported the appellant's argument regarding excise duty demand based on surrendered income. The Tribunal's decision aligned with previous rulings that emphasized the necessity of concrete evidence to support duty demands in excise matters.
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