1995 (11) TMI 153 - AT - Central Excise

Summary

Issues: Duty demand confirmation, penalty imposition, basis of show cause notice, reliance on income tax assessment order, clandestine removal charge, evidence requirement for charge substantiation.

In this case, the appeal was filed against an order confirming a duty demand of Rs. 69,716.75 and imposing a penalty of Rs. 20,000 on the appellant for allegedly clandestinely removing 6,747 tins of V.P. The basis of the show cause notice was an assessment order by the Assistant Collector of Income Tax, alleging excess stock pledged with the bank. However, the Income Tax Tribunal later set aside this order, finding that the inflated pledge memo filed by the appellant with the bank did not prove actual excess stock. The appellant argued that the charge of clandestine removal lacked evidence and was solely based on the now-reversed income tax assessment order. The Tribunal emphasized the need for corroborative evidence and rejected the reliance on figures furnished to the Department of Industries as insufficient proof. The judgment highlighted the absence of affirmative evidence and the setting aside of the assessment order as reasons to allow the appeal and overturn the impugned order.

This case involved issues concerning the validity of duty demand confirmation and penalty imposition based on an income tax assessment order, the sufficiency of evidence for proving clandestine removal, and the importance of corroborative evidence in establishing charges of duty evasion. The Tribunal emphasized the need for concrete proof beyond mere allegations and highlighted the significance of setting aside the original assessment order in questioning the basis of the charges. The judgment underscored the principle that morality or intention of an assessee does not determine tax liability, focusing instead on the requirement for substantial and affirmative evidence to support allegations of duty evasion. Ultimately, the appeal was allowed, and the impugned order confirming the duty demand and penalty was set aside due to the lack of concrete evidence linking the appellant to the alleged clandestine removal of goods.