2009 (10) TMI 366 - HC - Central Excise

Demand- clandestine removal- The Revenue relied upon the statement of the Chemist Shri Om Praksh and one Shri B.L. Sihag, Manager and it was contended that the number of ingots prepared and dispatched from the factory was much more than the number reflected in the books of the assessee. Held that- The record maintained by the Chemist was only a piece of evidence but could not be solely used to hold that the production was more than that which was re corded. This is a pure finding of fact and no question of law much less a substantial question of law is involved in the appeal. Therefore, the appeal is rejected.

Summary

Issues:
- Whether Central Excise duty can be demanded based on private records showing higher production than reflected in statutory records resulting in clandestine removal of excess stock without proper documentation?

Analysis:
The case involved a dispute where the Central Excise Department found discrepancies in the production records of an assessee engaged in manufacturing M.S. ingots. The Revenue claimed that records maintained by the company's Chemist indicated a higher production of ingots than what was officially recorded. The Chemist's statements and records were crucial in establishing the alleged clandestine removal of excess stock without proper invoicing or entry in statutory records.

The Commissioner and the Tribunal examined the evidence, including the records maintained by the Chemist, and his oral statements. It was found that while the Chemist had made entries indicating higher production, he claimed that these ingots were not actually dispatched. The authorities concluded that there was no proven excess quantity of finished goods beyond what was officially recorded by the assessee. The Tribunal correctly emphasized that the burden of proof lay on the Revenue to demonstrate the existence of excess production, which they failed to do. The Chemist's records were considered as evidence but were not sufficient on their own to establish higher production levels.

The High Court, in its judgment, determined that no legal question, let alone a substantial one, arose in the appeal. It noted that all relevant authorities had thoroughly examined the evidence, including the Chemist's records and statements, before concluding that the Revenue had not substantiated the claim of excess production. The Court affirmed that the Chemist's records, while important, could not solely establish the alleged higher production. The decision to reject the appeal was based on the factual findings of the authorities and the lack of legal issues warranting further consideration.