1994 (4) TMI 196 - AT - Central Excise

Summary

Issues involved: Appeal against imposition of penalty and duty demand for clandestine manufacture and clearance of tread rubber.

Summary:
The appeal was filed against the order of the Addl. Collector of Central Excise, Bangalore imposing a penalty and duty demand on the appellants for clandestinely manufacturing and clearing tread rubber. The appellants argued that the charges were based solely on entries in the ledger of a carbon black dealer, with no corroborative evidence supporting clandestine activities. They contended that the burden of proof lay with the Department and without concrete evidence, penalizing them was unjust. The Department, on the other hand, relied on statements from the carbon black dealer and the Director of the appellants' firm to support their case of clandestine activities.

Upon considering both sides' arguments, the Tribunal observed that the duty demand was primarily based on records of carbon black purchases from a specific dealer. However, the lack of concrete evidence linking the appellants directly to clandestine activities raised doubts. The Tribunal noted discrepancies in the statements provided and highlighted the absence of a direct link between the appellants and the alleged clandestine activities. It was emphasized that relying solely on third-party evidence without establishing a clear connection was insufficient. The Tribunal suggested that other parameters, such as electricity consumption and production capacity, should have been considered for a more thorough investigation. Consequently, the Tribunal set aside the lower authority's order and remanded the matter for a fresh decision, emphasizing the need for a more comprehensive examination based on additional factors for corroboration.

In conclusion, the Tribunal allowed the appeal by remand, emphasizing the importance of thorough investigation and consideration of various parameters beyond mere record entries to establish clandestine activities conclusively.