2005 (1) TMI 239 - AT - Central Excise

Summary

Issues: Allegation of clandestine removal, reliance on private register entries, determination of assessable value, payment of duty before show-cause notice

Allegation of clandestine removal:
The appellant argued that the allegation of clandestine removal was not substantiated as no verification was conducted at the consignee's end to confirm the receipt of goods. They emphasized the need for concrete and tangible evidence to prove such a serious charge, citing various legal precedents. The appellant contended that reliance on a Register with incomplete entries was insufficient to establish clandestine removal, especially without corroborative evidence from customers. They highlighted the absence of shortages in raw materials or finished goods as further proof against the allegation. The appellant also pointed out that duty had been paid before the issuance of the show-cause notice, making penalties and interest unsustainable.

Reliance on private register entries:
The judgment discussed previous cases where reliance on private notes for charges of clandestine removal was deemed insufficient without concrete evidence. It was emphasized that mere entries in a private register were not enough to prove such serious allegations. The absence of evidence regarding the use of inputs or electricity to support manufacturing claims further weakened the case against the appellants. The lack of substantial proof led to the conclusion that the appellants could not be held responsible for clandestine removal based on the private register entries alone.

Determination of assessable value:
The appellant argued that the duty demanded was based on the sale price of goods, contrary to the established practice of determining assessable value by deducting duty from the price charged. Legal precedents were cited to support this argument, emphasizing the correct method of calculating assessable value in such cases. The appellant contended that duty payment prior to the show-cause notice issuance rendered penalties and interest unsustainable, further supporting their position on the determination of assessable value.

Payment of duty before show-cause notice:
The appellant highlighted that duty had been paid before the issuance of the show-cause notice, making penalties and interest unjustifiable. Legal precedents were cited to support this argument, emphasizing that duty payment prior to any formal notice should exempt the appellants from additional financial liabilities. The appellant's position was that the penalty and interest were not sustainable due to the timely payment of duty, as supported by relevant case law.

In conclusion, the judgment favored the appellant, setting aside the impugned order and allowing the appeal with consequential benefits, if any, granted to the appellants.