2005 (12) TMI 189 - AT - Central Excise

Demand and penalty - Clandestine manufacture and removal of goods - Evidence - HELD THAT - In this case, there is no thorough investigation, at all. In a number of rulings of the Tribunal, it has been held that for confirming clandestine production and removal, private records require corroboration. Consumption of electricity, purchase of excess raw material, evidence of purchase of unaccounted goods by buyers etc., normally establish clandestine production and removal. In this case, the entire charge rests on the packing slips recovered from the appellants. The appellants undertake job work also. Therefore, the packing slips cannot be a conclusive evidence for the production of goods on behalf of the appellants. No attempt, has been made with regard to the consumption of electricity. A reading of the Order-in-Original, indicate that the OIO has been issued on the basis of the presumptions and assumptions. In order to bring to book duty evaders, Revenue should do thorough investigations. If duty evaders do not leave any trace of their offences, we cannot presume commission of offence and penalise them. Detection of economic offence is verily a battle of wits between Revenue and trade. Adjudicating authority cannot come to the rescue of Department Officers who abdicate their responsibility. It appears as though the adjudicating authority justifies the poor investigation by the Departmental Officers. Even in respect of the confirmation of differential duty of Rs. 9,54,108/- on super enameled copper wires, there is no discussion in the findings. A perusal of the record of cross-examination, reveals the unsatisfactory quality of investigation. In these circumstances, we find that the OIO has no merits. We set aside the same and allow the appeals.

Summary

Issues:
1. Confirmation of duty demand and penalties by the Commissioner of Central Excise
2. Allegations of clandestine production and removal of goods
3. Lack of thorough investigation by the Revenue Department
4. Challenge to the findings of the adjudicating authority

Analysis:
1. The case involved an appeal against the Order-in-Original passed by the Commissioner of Central Excise, confirming duty demands and penalties amounting to Rs. 62,89,701/- for bare copper wire and Rs. 9,54,000/- for super enameled copper wire. The adjudicating authority also imposed penalties on the company and its Managing Director, along with confiscation of assets. The appellants contested these findings before the Tribunal, challenging the confirmation of demands and penalties.

2. The appellants were accused of clandestine production and removal of goods based on excess stock found during a visit by departmental officers. However, the appellants argued that there was no substantial evidence supporting these allegations. The investigation primarily relied on packing slips without corroborative evidence like excess raw material purchases or consumption of electricity. The Tribunal noted that no thorough investigation was conducted to prove clandestine activities, and cited relevant case laws emphasizing the need for corroborative evidence in such cases.

3. The Tribunal highlighted the lack of thorough investigation by the Revenue Department in establishing clandestine production and removal. It noted that private records alone were insufficient to confirm such activities, emphasizing the importance of corroborative evidence like electricity consumption and raw material purchases. The Tribunal criticized the presumptions and assumptions made in the Order-in-Original, stating that duty evasion cases require meticulous investigations to substantiate charges.

4. The Tribunal ultimately set aside the Order-in-Original, citing the lack of substantial evidence and poor quality of investigation. It criticized the adjudicating authority for justifying inadequate investigation by departmental officers and emphasized the need for thorough examinations to detect economic offenses. The Tribunal found the Order-in-Original lacking in merits and allowed the appeals of the appellants, overturning the duty demands and penalties imposed by the Commissioner of Central Excise.

This detailed analysis of the judgment showcases the issues involved, the arguments presented by both parties, and the Tribunal's critical assessment of the investigation and findings leading to the decision to set aside the Order-in-Original.