1993 (7) TMI 190 - AT - Central Excise

Summary

Issues Involved: Alleged clandestine manufacture and removal of tread rubber, demand of duty, levy of penalty based on shortage of reclaimed rubber.

Summary:
The appeal was against the order of the Addl. Collector of Central Excise, Kochi, where the appellants were accused of clandestinely manufacturing and removing tread rubber, leading to a duty demand and penalty imposition. The lower authority based its decision on the shortage of reclaimed rubber, a raw material. The appellants argued that the shortage did not conclusively prove clandestine activities, citing previous tribunal and court judgments. The High Court's ruling emphasized considering various production parameters before establishing clandestine activities based solely on material shortage.

Upon investigation, discrepancies in raw material were found in the factory, prompting further inquiry. Statements from employees indicated no goods were sent out of the factory, and defective raw rubber was returned to the supplier. The lower authority noted a confirmed shortage of reclaimed rubber without a plausible explanation. However, the appellant's explanation and lack of concrete evidence regarding clandestine removal or use of other materials raised doubts. Despite irregularities in the return process of reclaimed rubber, the absence of conclusive evidence led to the appellate tribunal granting relief to the appellant, citing the benefit of doubt.

In conclusion, the appeal was allowed due to insufficient evidence to establish clandestine manufacture and removal of tread rubber solely based on reclaimed rubber shortage, emphasizing the need for comprehensive investigation and consideration of all relevant parameters.