1998 (4) TMI 298 - AT - Central Excise

Summary

Issues:
1. Allegation of duty evasion on clandestine removal of aerated waters.
2. Allegation of suppressed production of aerated waters.
3. Examination of evidence regarding receipt of concentrates by the respondents.
4. Determination of suppressed production based on franchise agreement.

Allegation of Duty Evasion on Clandestine Removal:
The case involved an appeal by the Revenue against the dropping of proceedings initiated under a show cause notice due to alleged evasion of excise duty on aerated waters. The respondents, manufacturers of aerated waters under various brand names, were accused of clearing products without payment of duty. The Department calculated the evaded duty on clandestine removal to be Rs. 2,34,112/- BED and Rs. 21,096/- SED. The issue arose from discrepancies in the accounts regarding the purchase and production of beverage base concentrates, leading to the allegations of duty evasion. The adjudicating authority considered the evidence but dropped the proceedings due to doubts regarding the receipt of certain concentrates and lack of concrete evidence supporting the allegations.

Allegation of Suppressed Production:
Another issue was the allegation of suppressed production of aerated waters by the respondents. The Department claimed that the production was less than what it should have been based on the franchise agreement specifications. The alleged suppressed production of 10,45,754 bottles of aerated waters without duty payment amounted to Rs. 6,58,451/- BED + Rs. 45,841/- SED. However, the adjudicating authority found discrepancies in the allegations, stating that the excess production had been satisfactorily explained. The authority highlighted clerical errors in sales figures and discrepancies in the receipt and disposal of crown corks, which were reflected in the records submitted for scrutiny. Ultimately, the authority held that the allegations of clandestine removal and suppressed production were not proven based on the evidence presented.

Examination of Evidence Regarding Receipt of Concentrates:
The adjudicating authority carefully examined the evidence related to the receipt of concentrates by the respondents. While two out of five gate passes covering the concentrates were accounted for, doubts remained regarding the explanation for the remaining units of concentrates. The authority considered cross-examinations, affidavits, and probabilities to conclude that certain concentrates had not been satisfactorily explained to have been received by the respondents. This led to the dismissal of the allegations related to clandestine manufacturing and duty evasion based on those concentrates.

Determination of Suppressed Production Based on Franchise Agreement:
The franchise agreement between the respondents and the brand name owners contained specifications for production yield, which formed the basis for the allegation of suppressed production. However, the adjudicating authority found that the agreement's formula was ideal and not necessarily reflective of actual production practices. The authority noted discrepancies in sales figures and clerical errors, which were corroborated by the brand name owners. The authority concluded that the allegations of suppressed production were not substantiated by the evidence presented. The appellate tribunal upheld the authority's decision, stating that there was no legal basis to interfere with the findings, as the respondents had satisfactorily explained the discrepancies in production records.

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