2008 (3) TMI 108 - AT - Central Excise

Allegation of clandestine removal on ground that goods received duty free were not used in mfg. of final product (pesticides) - deponent deposed that the goods purchased by him were used in the manufacture of pesticides, which were sold by him to various customers - statements of recipients of the pesticides were also recorded wherein they confirmed having received the pesticides from the appellant no evidence of clandestine removal - demand on surmises & conjectures is not justified

Summary

Issues:
1. Confirmation of demand of duty against the appellant for receiving Solvent CIX and Xylene without payment of duty.
2. Allegation of non-existence of supplier of pesticides material and absence of machinery for pesticide manufacture.
3. Contention regarding retracted statement of the appellant's proprietor and statements of recipients of pesticides.
4. Rejection of transporter's affidavit and lack of evidence for duty-free chemicals not being used in the final product.
5. Justification for holding against the appellant.

Analysis:

1. The impugned order confirmed the demand of duty against the appellant for receiving Solvent CIX and Xylene without payment of duty, exempted under Notification No.276/67 for use in pesticide manufacture. The lower authority based its decision on the appellant's process of adding chemicals to produce pesticides, questioning the existence of the supplier of pesticides material and the lack of machinery for pesticide manufacturing.

2. The appellant argued that machinery was unnecessary for their manufacturing process and contested the statement of the proprietor, retracted due to language issues. Subsequent statements and customer affirmations supported the appellant's claim of selling pesticides. The adjudicating authority's conclusion that the appellant did not sell pesticides directly was challenged based on invoice details.

3. The retracted statement of the appellant's proprietor was considered by the lower authority, but the Tribunal noted the retraction's timing and language barrier. Subsequent statements and customer affirmations contradicted the initial doubts raised by the adjudicating authority, emphasizing the lack of evidence against the appellant.

4. The rejection of the transporter's affidavit was criticized as speculative by the Tribunal, which highlighted the physical presence of chemicals at the appellant's factory and the sale of pesticides to customers through another entity. The absence of concrete evidence for clandestine activities further weakened the Revenue's case.

5. The Tribunal found no justification for holding against the appellant, setting aside the impugned order and granting relief to the appellant based on the lack of substantial evidence supporting the duty demand. The decision was made in favor of the appellant due to insufficient proof of wrongdoing.

This comprehensive analysis of the judgment highlights the key issues, arguments, and conclusions made by the Appellate Tribunal CESTAT, Ahmedabad, in the case.