2005 (8) TMI 216 - AT - Central Excise

Demand u/s 11A - Confiscation of Land, Building Plant Machinery - option to redeem them on payment of redemption fine - Evidence of Removal - Burden of proof - HELD THAT - We would find that for production to be suppressed, that by itself cannot be conclusive to establish clandestine non duty paid removal, since production and removal are two distinct relative acts. If unaccounted production was being resorted by the assessee, some material indicating unaccounted production and or removal of recent origin, on date of search would have been found on the visit on information and by surprise by the officers. No such material exist. Mere unauthorised and clandestine manufacture of PTY, as alleged by Revenue, cannot be established without 'removal'. 'Unauthorized and clandestine' are words associated more with 'removal' than production. The findings of the Adjudicator are mere ipsi dixit and cannot be sustained, in absence of any corroboration of tainted removals. Since, the burden of clandestine Removal is not discharged, the reliance on Kanungo Co. 1972 (2) TMI 35 - SUPREME COURT and Siemen Ltd. 1993 (8) TMI 193 - CEGAT, CALCUTTA by the adjudicator cannot be upheld. We find that if the said record, on Oil consumption, can be relied upon by Revenue, the same cannot be discarded, as regards POY Consumption PTY production also shown with same clarity of detail shift wise etc. The ld. Advocate for the appellants has produced material figures, from the said record and the RG1 figures, to indicate that the records as regards entries of POY consumption PTY manufacture cannot be disputed. These figures/charts do not demonstrate that unaccounted PTY was ever manufactured or and removed. We find the notice was issued on 24-3-2000 and the allegation of unaccounted production is for the period March 1994 to November 1994 April 1995 to March 1996. Part of the period is clearly barred by limitation of even 5 years. The period within 5 years also cannot be upheld for want of suppression or ingredients of proviso clause to Section 11A(1). When we find no unaccounted production and or non duty paid removals of PTY established, we find no reason to confirm the duty demands and uphold the penalties as arrived by the adjudicator. The same is required to be set aside. In view of the findings the order is set aside and appeals allowed.

Summary

Issues:
Challenging duty demand under Section 11A, imposing penalties under Rule 173Q(1) and Rule 209A, ordering confiscation of assets, suspicion of unaccounted production, discrepancy in production records, theoretical calculations, unaccounted production allegations, lack of evidence, reliance on case laws, reliance on records, limitation period, confirmation of duty demands, setting aside penalties.

Analysis:
The judgment involves the appeal challenging duty demand under Section 11A, penalties under Rule 173Q(1) and Rule 209A, and the confiscation of assets. The case revolves around suspicion of unaccounted production based on discrepancies in production records. The alleged unaccounted production was calculated using theoretical assumptions, which the tribunal found to be against industrial production norms. The tribunal emphasized the need for actual evidence to support allegations of clandestine production and removal, citing precedents and highlighting the importance of corroborative evidence.

The tribunal considered various aspects raised by the appellants, including the transportation of oil, work in progress, and the maintenance of records. It noted that the records maintained by the assessee were in order and that the notice of unaccounted production was issued after a significant delay, without substantial material to support the claims. The tribunal found that the burden of proving clandestine removal was not met, emphasizing the distinction between production and removal and the necessity of concrete evidence to establish unauthorized activities.

Regarding the reliance on case laws and records, the tribunal analyzed previous judgments to determine the standard of proof required for allegations of unaccounted removal. It differentiated between cases where evidence of removal existed and cases where only production was alleged, emphasizing the need for concrete proof of clandestine removal. The tribunal also considered the limitations period for the allegations and found that the evidence presented did not support the duty demands and penalties imposed by the adjudicator.

Ultimately, the tribunal set aside the order, ruling in favor of the appellants due to the lack of substantiated evidence of unaccounted production or non-duty paid removals. The duty demands and penalties were overturned based on the tribunal's findings, highlighting the importance of concrete evidence and adherence to legal standards in such cases.

In conclusion, the judgment provides a detailed analysis of the issues raised, emphasizing the need for evidence, adherence to legal standards, and the burden of proof in cases involving allegations of unaccounted production and removal. The tribunal's decision to set aside the order underscores the importance of substantiated claims and the necessity of meeting legal requirements in such matters.