2002 (2) TMI 248 - AT - Central Excise

Summary

Issues:
1. Shortage of HDPE fabric and tape during stock-taking.
2. Alleged clandestine removal of HDPE fabrics without payment of duty.
3. Confirmation of duty demand and penalty under section 11AC of the Act.
4. Application of input-output ratio for determining clandestine removal.
5. Lack of evidence supporting clandestine activities.
6. Selection of specific financial years for demand calculation.

Analysis:
1. The central excise officers found a shortage of HDPE fabric and tape during a stock-taking visit to the appellant's factory. The duty involved on the short found fabric was Rs. 6,865.22.

2. The department alleged that the appellant clandestinely removed HDPE fabrics without paying duty during 1994-95 and 1995-96, issuing a show cause notice for duty demands of Rs. 1,03,259 and Rs. 34,719, respectively, along with duty on the short found goods.

3. The Additional Commissioner confirmed a total duty of Rs. 1,44,852.89 with a personal penalty under section 11AC, which was upheld by the Commissioner (Appeals), leading to the present appeal.

4. The appellant argued that the Revenue's conclusion of clandestine removal based on the input-output ratio of two financial years was unjustified. They provided a reconciliation statement showing minimal discrepancies over five years, emphasizing the continuous manufacturing process and the need to consider the entire period.

5. The Tribunal noted the absence of tangible evidence supporting clandestine activities besides the input-output ratio. It questioned the Revenue's selection of only two financial years for calculation and emphasized the requirement for concrete proof of clandestine removal.

6. The Tribunal agreed with the appellant's submissions, setting aside the impugned order due to the lack of evidence supporting the Revenue's claims and the failure to establish clandestine removal. It highlighted the necessity of tangible and positive evidence to prove such charges, ultimately allowing the appeal and providing consequential relief to the appellants.