2003 (7) TMI 229 - AT - Central Excise

Demand - Evidence - Clandestine manufacture and clearance of goods - HELD THAT - On a careful consideration, I find lot of force in the submissions made by Counsel. The revenue has not raised any ground on the various findings recorded by the Commissioner (Appeals). The only ground that they have taken up is the voluntary admission before the Customs/Central Excise Officers need not be proved as there is no assumption that they were not coersion. There is no dispute on this point. But, the point is that whether the voluntary admissions were true and correct and whether they were reliable. The Commissioner has noted that there are several contradictions in the statement and they are not reliable for upholding the demands of clandestine manufacture and removal of goods. It is well settled now that the manufacturer should have the capacity to manufacture the item besides the revenue showing that the manufacturer had purchased the inputs, utilisation of the same in manufacturing of the end-product, proof of power consumption, sale of those materials clandestinely. Commissioner after due consideration has clearly recorded that no such evidence was placed by revenue. When there is no machinery set up in the factory, it is difficult to accept the proposition that mere statement is sufficient to confirm the demands. A product like EVA coated fabrics requires machinery and various infrastructures like power consumption, etc. for its manufacture. When these infrastructures for manufacturing EVA coated fabrics are not available, then lower authorities plea for confirming the demands cannot be accepted. Therefore, I do not find any merit in the appeal and hence, I reject the revenue appeal.

Summary

Issues involved: Revenue appeal against Order-in-Appeal setting aside Order-in-Original based on statement recorded alleging clandestine manufacture and clearance of goods.

1. Statement validity and corroborative evidence:
The Commissioner accepted appellant's contention of contradictions in the statement and lack of evidence regarding raw material purchase, machinery installation, labor employment, and sale of final product. Emphasized the absence of corroborative material evidence and reliance on presumptions and assumptions for confirming demands.

2. Voluntary statements and legal precedents:
Revenue challenged the voluntary nature of statements, citing Supreme Court judgment and precedent where clandestine removal was substantiated based on statements and private account books. Requested acceptance of statements for confirming demands.

3. Contradictory statements and reliability:
Counsel highlighted contradictions in the statements, emphasizing the necessity for revenue to provide evidence on various aspects like raw material purchase, production capacity, and power consumption. Compared the case to precedents where statements were found true and correct, unlike the contradictory statements in this instance.

Judgment:
The Tribunal found merit in Counsel's submissions, noting the lack of evidence provided by revenue to support clandestine manufacture claims. Emphasized the need for capacity, infrastructure, and proof of manufacturing processes for confirming demands, which were absent in this case. Rejected the revenue appeal based on the insufficiency of mere statements without supporting evidence.