2004 (1) TMI 121 - AT - Central Excise

Duty demand - Clandestine removal of the goods against the company - Evidence - penalty - HELD THAT - The fact that in the packing slips and GRs, the names of the consignees of the goods did not tally, could not lead to an inference that there had been clandestine removal of the goods by the company appellant No. 1 by using the duplicate invoices, as alleged by the Department. No copies of the duplicate invoices were recovered from the premises of the company appellant No. 1. The uncorroborated initial statement of J.K. Gupta could not be used as substantive piece of evidence to charge the company appellant No. 1 with clandestine manufacture and removal of the goods, especially when he himself later on had denied from receipt of the goods and no goods had been found from his premises. The penalty under Rule 209A, against M/s. Carton India has already been set aside by the Commissioner (Appeals) vide order dated 22-12-2003 by holding that the charge of receiving goods from the company appellant No. 1 without payment of duty did not stand proved. It is well settled that the charge of clandestine removal of the goods by a manufacturer cannot be based on assumptions and presumptions. This charge has to be proved by adducing cogent, convincing and tangible evidence. In the present case, in the light of the discussions made above, the Department has failed to substantiate this charge against the company appellant No. 1. That being so, confirmation of duty with penalty against company appellant No. 1 and imposition of penalties on the other appellants under Rule 209A cannot be sustained. Consequently, the impugned order is set aside and the appeals of the appellants are allowed with consequential relief, if any permissible under the law.

Summary

Issues Involved: Duty demand on the company for clandestine removal of goods, penalty imposed on other appellants under Rule 209A.

Summary:
The appeals were directed against the order-in-appeal affirming duty demand on the company for clandestine removal of goods without payment of duty, along with penalties imposed on other appellants under Rule 209A. The allegations were based on packing slips and GRs recovered from the company's premises. The company contended lack of tangible evidence to substantiate the allegations. The impugned order was challenged by the appellants, while the JDR supported its correctness.

Upon review, it was found that the company had allegedly supplied goods without duty payment to various entities. However, denials of receipt were made by the supposed recipients during investigation. Lack of evidence regarding extra raw material, electricity consumption, or unaccounted goods was noted. The mismatch in consignee names on documents did not conclusively prove clandestine removal. The initial statement of a recipient lacked corroboration and could not be solely relied upon. Notably, penalties against one of the appellants had already been set aside by the Commissioner (Appeals).

The Tribunal emphasized that charges of clandestine removal must be proven with concrete evidence, not assumptions. As the Department failed to substantiate the charge against the company, the confirmation of duty with penalty and penalties on other appellants could not be upheld. Consequently, the impugned order was set aside, and the appeals of the appellants were allowed with any consequential relief permissible under the law.