2005 (1) TMI 162 - AT - Central Excise

Demand - Clandestine manufacture and removal of the finished goods as well as scrap - raw material - manufacture of aluminium foils/sheets - HELD THAT - Regarding receipt of raw material, the details had been shown in annexure C. The raw material was received by the company from M/s. Rakhi Agency and entries at Nos. 35, 37, 55, 56, 76 and 90 had tallied with the entries in the RG 23 A Part I register as even observed by the adjudicating authority. Regarding the other entries, no material has been brought on record to prove the actual receipt of the raw material by the company from the supplier in a clandestine manner. The Director of the appellant company did not admit the clandestine receipt of the raw material and clearances of the final products without payment of duty. Even the report given by the AC of the Sales Tax Department, vide letter dated 11-5-2000 about the vehicles of the company which crossed their check post, showed the entries tabulated in annexures A and D showing the clearances of the goods, were correct. Regarding the clearances of the goods through parallel invoices Nos. 95 and 96 in a clandestine manner, there is no cogent and convincing evidence on the record. Both these invoices are dated 19-2-2000 and were issued from the invoice book, on the date when the Central Excise Officers visited the factory premises of the company and even at that time, sufficient balance was standing in RG 23 Part II, maintained by the company and that amount was sufficient to cover the duty amount. In fact, the actual clearance of the goods on 19-2-2000, under both the invoices, by the company, does not stand proved from any tangible evidence. No buyer of the goods covered by these invoices, had been identified. Similarly regarding the clearances of the scrap weighing 3718 kgs. It is well settled that charge of clandestine manufacture and removal of the goods against any assessee, cannot be based and confirmed on the basis of assumptions and presumption. Such a charge has to be proved by adducing cogent/convincing and tangible evidence. The Revenue in our view, in the instant case, has failed to substantiate this charge against the company and as such, confirmation of duty and imposition of penalty on it, as detailed in the impugned order, cannot be sustained and are set aside. Consequently, the imposition of penalties on the other appellants Nos. 2 to 4, cannot be maintained and are set aside. Thus, the impugned order is set aside in toto against all the appellants and the appeals of the appellants are allowed with consequential relief as per law.

Summary

Issues involved: Alleged clandestine removal of goods, duty confirmation, penalty imposition, reliance on evidence, cross-examination of witnesses, confirmation of duty and penalties.

Summary:
The appeals were directed against an order confirming duty and imposing penalties on the appellants for alleged clandestine removal of goods without payment of duty. The company was engaged in manufacturing aluminum foils, with duty confirmed for removing finished goods clandestinely. Penalties were confirmed against other appellants for assisting in the removal of goods. The Counsel argued lack of tangible evidence to prove clandestine activities, reliance on inadmissible documents, and failure to cross-examine witnesses. The SDR supported the impugned order, stating that the authority rightly relied on evidence.

Upon review, it was found that while some entries in seized notebooks matched invoices issued by the company, there was insufficient evidence to prove goods were cleared without payment of duty. Witness testimonies were not reliable as they were not cross-examined. Reports obtained without the company's opportunity to challenge them were deemed inadmissible. Allegations of clearances through parallel invoices lacked convincing evidence. The company provided certificates and records to support their claims, and the charge of clandestine removal was not substantiated with tangible evidence.

As a result, the impugned order confirming duty and penalties was set aside for all appellants, and the appeals were allowed with consequential relief.