2008 (2) TMI 150 - AT - Central Excise

Allegation that what was shown as scrap in the balance sheet was actually finished goods rejected by principal manufacturer - adjudicating authority s finding that the percentage of scrap is very high for plastic industry cannot lead to the conclusion that the quantity shown as waste and scrap is nothing but the quantity of rejected finished goods demand & penalty on basis of assumption and presumption not sustainable assessee s appeal allowed

Summary

Issues: Duty demand and penalty confirmation based on alleged clearance of polythene bags without payment of duty.

In the judgment delivered by the Appellate Tribunal CESTAT, MUMBAI, the issue at hand involved a duty demand of Rs. 2,20,761/- and an equivalent penalty confirmed against the appellants for the alleged clearance of 21227.05 kgs. of polythene bags without payment of duty. The authorities below had upheld the demand, contending that the quantity in question represented polythene bags rejected by another entity. The appellants challenged this assertion, arguing that the rejected bags were rectified and returned to the said entity. The Tribunal noted that the department's case was primarily based on assumptions and presumptions, lacking substantial evidence to support the claim that the quantity declared as scrap was indeed the rejected finished goods. The Tribunal found the argument of high scrap percentage in the plastic industry insufficient to establish the alleged clearance without payment of duty. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief due to the appellants as per the law.

This judgment highlights the importance of substantiating claims in cases involving duty demands and penalties. It underscores the necessity of concrete evidence to support allegations and the potential consequences of basing decisions on assumptions rather than facts in matters of excise duty compliance. The Tribunal's emphasis on the lack of substantiation and the reliance on assumptions by the adjudicating authority serves as a cautionary tale for future cases, emphasizing the need for thorough documentation and evidence to support claims and allegations in excise duty matters.