2003 (11) TMI 148 - AT - Central Excise

Demand - Clandestine manufacture and removal - HELD THAT - On a careful consideration of the ground I notice that there is no concrete evidence cited in the matter. The Revenue has not examined the customers who have purchased the goods. The ld. DR pointed out to the allegation in show cause notice and finding recorded in the order-in-original. On this point the plea of assessee is that these bogus invoices were made for the purpose of seeking enhance the banking facility and the said plea has been accepted. There is no corroborative evidence of any sort in the matter hence the Commissioner is justified in dropping the proceedings. There is no point in remanding the matter as prayed by ld. DR as the Revenue is not in a position to establish the facts as required which are fatal to the investigation. Learned DR pointed out that Shri Paulraj has resiled from his statement only on one ground but the evidence shows that he has delivered goods to places like Bangalore Mumbai Badravati and other places which has not been resiled and he submits that these circumstances are sufficient to confirm the demands. I notice that Commissioner (Appeals) has given very strong reason and in the grounds of appeal itself it is stated that it is not possible to produce evidence of raw material account proof of receipt of raw materials production account flowback in the matter. I notice that they have also not produced all the traders for cross-examination. In view of the circumstances and lack of evidence the benefit of doubt has to be given to the assessees. There is no infirmity in the impugned orders. Hence the Revenue appeal is dismissed.

Summary

Issues involved: Revenue's appeal against the order setting aside demand for clandestinely manufacturing and removing goods.

Details of the Judgment:

1. Revenue's Contentions:
The Revenue argued that the inability to prove the offence with mathematical precision does not negate the clandestine activities. The lack of maintained accounts for raw materials and packing materials hindered the investigation. The nature of fireworks production, with no standard input-output ratio, further complicated the matter. Despite non-seizure of offending goods, confessional statements from purchasers indicated illicit activities. The Revenue also disputed the Appellate Authority's findings on bogus invoices and lack of financial flowback evidence.

2. Cross-Examination and Evidence:
The Assistant Commissioner's refusal to allow cross-examination of all traders involved was a point of contention. The Commissioner's reliance on the admission of a lorry transporter, later rescinded, was challenged. The absence of corroborative evidence regarding raw material purchase, manufacturing, and clandestine sales led to the Commissioner setting aside the allegations. The principle that suspicion cannot replace proof was emphasized, citing legal precedents.

3. Decision and Conclusion:
The Tribunal noted the lack of concrete evidence and failure to examine customers who purchased the goods. The absence of proof for clandestine removal and the inability to establish facts fatal to the investigation justified dismissing the Revenue's appeal. The Commissioner's decision to drop the proceedings due to insufficient evidence and lack of corroborative proof was upheld. The benefit of doubt was given to the assessees due to the circumstances and lack of evidence, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decision to set aside the demand for clandestinely manufacturing and removing goods due to insufficient evidence and lack of corroborative proof.