1991 (7) TMI 208 - AT - Central Excise

Summary

Issues:
1. Appeal against the order of the Additional Collector of Central Excise, Hyderabad.
2. Initiation of proceedings due to the seizure of 2000 video cassettes.
3. Charges against the respondents and M/s. Mahendra Electronics.
4. Allegation of clandestine removal of goods.
5. Absence of markings on packages and brand names on cassettes.
6. Inconsistencies in statements regarding transportation of packages.
7. Allegation of M/s. Mahendra Electronics being a dummy company.
8. Lack of documentary evidence to prove the removal of cassettes.
9. Confiscation of seized goods and imposition of penalty.
10. Absence of entries in the RG 1 register for 1500 cassettes.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras, stemmed from the Additional Collector of Central Excise, Hyderabad's order dropping proceedings against the respondents concerning the seizure of 2000 video cassettes. The lower authority had directed the Collector to file an appeal under Section 35E of the Central Excises & Salt Act, 1944. The charges were twofold, involving the seized cassettes at the transporter's premises and 1500 cassettes not entered in the RG 1 register at the respondents' factory. The Department alleged clandestine removal of goods and argued that M/s. Mahendra Electronics was a dummy company of the respondents. The Department contended that the absence of markings on packages and brand names on cassettes indicated clandestine removal. However, the respondents provided evidence of invoices for dispatch from the duty-paid godown, denying the allegations. The Tribunal noted that suspicion alone cannot substitute proof, emphasizing the Department's burden to prove duty evasion. The Tribunal found no correlation between goods removed from the factory and sales from the duty-paid godown, absolving the respondents of clandestine removal charges.

Regarding the 1500 cassettes not entered in the RG 1 register, the Tribunal considered the respondents' explanation that entries were pending and found no contradictory evidence. The Department failed to provide information on the production date and storage duration of these cassettes, leading to doubts. The Tribunal held that the benefit of doubt must favor the respondents in this matter. Consequently, the appeal of the Revenue was dismissed based on the lack of substantial evidence supporting the allegations of clandestine removal and unregistered cassettes.