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2008 (9) TMI 522 - HC - Central ExciseClandestine manufacture - Whether in the facts and circumstances of the case, the Custom, Excise and Gold (Control) Appellate Tribunal was right in applying the principles laid down in various decisions and in holding that the burden of proof was not shifted on the assessee? Held that - approach of Tribunal that department to prove quantity of goods carried in each truck for which no entry was made in company records is totally illegal. No person will maintain authentic records of illegal activities. Tribunal to reexamine case by drawing adverse inference against assessee.
Issues:
Burden of proof in excise case regarding illegal manufacture and clearance of goods. Detailed Analysis: The case involved the seizure of cylinders from a company's godowns without proper excise documents. The police investigation revealed that the company had cleared trucks without documentation, leading to excise department involvement. Statements from various individuals, including company employees and drivers, implicated the company in illicit activities related to cylinder manufacturing and clearance. The Collector found overwhelming evidence supporting the department's case, indicating clandestine manufacturing and clearance of cylinders without excise duty payment. The company appealed to the Custom, Excise & Gold Appellate Tribunal (CEGAT), which accepted the appeal based on perceived lack of conclusive evidence regarding the quantity of goods carried in trucks and potential biases in witness statements. The Tribunal questioned the department's evidence related to the quantity of raw materials received by the company for cylinder manufacturing. Despite finding some discrepancies, the Tribunal concluded that the evidence did not definitively prove the allegations against the company. The High Court noted that the company failed to provide evidence of the goods carried in trucks that crossed barriers, relying on official records that indicated the nature of materials being transported. The Court highlighted the significant quantity of imported LPG sheets without excise duty payment, suggesting illicit manufacturing activities. The Court disagreed with the Tribunal's approach, emphasizing that once illegal activities were established, the burden of proof shifted to the company. The Court emphasized that authentic records of illegal activities are unlikely and supported drawing adverse inferences against the company based on proven facts. Ultimately, the Court favored the department, setting aside the Tribunal's decision and remanding the case for re-examination with adverse inferences against the company. In conclusion, the High Court's judgment focused on the burden of proof in excise cases involving illegal manufacturing and clearance of goods. The Court highlighted the importance of shifting the burden to the company once illegal activities were established and emphasized drawing adverse inferences based on proven facts to combat illegal and criminal activities effectively.
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