2005 (1) TMI 299 - AT - Central Excise

Clandestine removal of fireworks - Proof - demand of duty - Penalty - HELD THAT - The demand quantified on the basis of documentary evidence gathered by the department has been rightly honoured. The demand now in question is one which is not based on any independent evidence. It is based on an assumption that the respondents might have cleared fireworks (without payment of duty) to certain agents (from whom no evidence was gathered) in the same manner as they cleared to other agents (from whom evidence was collected). This does not have the sanction of law. Admittedly, the period of dispute in these cases is prior to 28-9-1996, the date on which Section 11AC came into force. It is settled law that Section 11AC has no retrospective effect. Therefore, we find that the department's proposal for imposing penalties on the respondents u/s 11AC was rightly dropped by the Commissioner. Thus, we reject these appeals.

Summary

Issues involved: Appeal by Revenue against order vacating certain demands of duty raised on respondents in relation to clandestine clearances of fireworks.

Issue (a): Whether respondents cleared goods illicitly based on seized documents recovered from various premises. Respondents did not contest on this issue.

Issue (b): Whether respondents suppressed goods value and collected differential amount separately as per seized documents recovered from a specific residence. Respondents did not contest on this issue.

Issue (c): Whether respondents adopted 'standard packing' and suppressed quantity in invoices, collecting differential amount separately. Respondents had a valid contention on this issue.

Issue (d): Whether respondents adopted standard price, suppressed price in invoices, and collected differential amount separately. Respondents had a valid contention on this issue.

The case law cited by both sides was considered. The Revenue argued that evidence gathered should be conclusive, while the respondents contended that demands based on hypothetical assumptions are not valid. The Tribunal emphasized the need for positive evidence to support a finding of clandestine removal of goods. The appeals also challenged the dropping of penalties under Section 11AC, which was rightly dropped as it has no retrospective effect. The appeals were rejected based on the above considerations.