2001 (8) TMI 162 - AT - Central Excise

Summary

Issues Involved: Appeal against duty demand and penalty imposed by Additional Commissioner, modification of order by Commissioner (Appeals), lack of corroborative evidence in the case.

Duty Demand and Penalty Imposed:
The appeal was directed by the Revenue against the order in appeal modifying the original order of the Additional Commissioner regarding duty demand and penalty. The respondents, engaged in manufacturing electric fans, were issued a show cause notice based on slips recovered during a search, alleging clandestine manufacture and removal of fans. The Additional Commissioner confirmed duty demand of 18,49,045.95 and imposed a penalty of Rs.15 lakhs. The Commissioner (Appeals) later modified the order, reducing duty demand to 350 fans and penalty to Rs. 1 lakh.

Lack of Corroborative Evidence:
The duty demand was solely based on slips recovered by the Income Tax authorities, without any physical verification of stock or discrepancy in recorded entries. No corroborative evidence, such as receipts of raw material or sales records, was found during investigation. The partner of the respondents' firm stated that the slips only contained customer orders, which was accepted as true by the Investigating officer. Affidavits from customers denying receipt of fans without duty payment were also presented, with no evidence to rebut them. The duty liability was admitted only for 350 fans, which had already been discharged.

Judgment and Conclusion:
The Commissioner (Appeals) rightly modified the order, noting the lack of corroborative evidence linking the slips to clandestine manufacture and sale of fans. The Tribunal upheld the Commissioner's decision, stating that the duty liability could not be established based solely on the recovered slips without additional evidence. The appeal by the Revenue was dismissed, finding no merit in challenging the modified order.