1992 (12) TMI 159 - AT - Central Excise

Summary

Issues Involved:
1. Charge of clandestine removal of excisable goods.
2. Reliability of evidence, including statements and documents.
3. Adequacy of investigation by the Department.
4. Legal burden of proof on the Department.

Summary:

Charge of Clandestine Removal:
The main issue for consideration was whether the evidence on record substantiated the charge of clandestine removal of tread rubber by the appellant for the period in question as set out in the show cause notice. The Department's case relied heavily on the "Anamath account" and other documents seized during the investigation.

Reliability of Evidence:
The appellant contended that the statements of Madhusudhana Rao and Raja Rao, who were aggrieved against him, were fabricated. The appellant also argued that no reliance could be placed on the statement of K.P. Menon, who admitted in cross-examination that his statement was made in collusion with the officers. The adjudicating authority's reliance on the "Anamath account" without corresponding verification of the entries therein was also challenged.

Adequacy of Investigation:
The investigation was found to be incomplete. The Department failed to verify the entries in the "Anamath account" by contacting various persons with whom transactions were recorded. The initial show cause notice was issued on 29-10-1982, and a second notice was issued on 9-9-1985 after further investigation. The delay and lack of thorough investigation were noted.

Legal Burden of Proof:
The onus was on the Department to prove the charge of clandestine removal. The absence of cash balance as per the "Anamath account" and the lack of seizure of raw rubber or any clear source of supply further weakened the Department's case. The adjudicating authority's reasoning that the appellant had not proved that the DDs were not received for illegal sales was found untenable in law. The appellant cannot be called upon to prove a negative; it was for the Department to establish the connection.

Conclusion:
The evidence on record did not sufficiently establish the charge of clandestine removal. The proceedings being penal in nature, the appellant was given the benefit of doubt. The impugned order was set aside, and the appeal was allowed. The appellant was exonerated of the charge due to insufficient evidence.