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1997 (4) TMI 291 - AT - Central Excise
Issues:
Clandestine removal of goods after reprocessing defective paints and varnishes without proper accounting and correlation. Analysis: The case involved the removal of defective paints and varnishes from a non-duty paid store-room for reprocessing in a factory. The Revenue objected to the lack of proper accounting for the quantity reprocessed out of the defective goods. The Assistant Collector confirmed the duty demand and issued three show cause notices. Upon appeal, the lower appellate authority ruled in favor of the respondents, stating that the burden is on the department to prove clandestine removal. The Commissioner (Appeals) set aside the impugned orders, noting the historical practice of reconditioning and the submission of RT-12 returns showing such removals. During the hearing, the Revenue reiterated the findings of the Assistant Collector, while the respondents' representative supported the lower appellate authority. The Tribunal agreed with the Commissioner (Appeals), emphasizing that the burden lies on the Revenue to prove clandestine removal post-reprocessing. The Tribunal found no evidence of such removal by the respondents and deemed the Revenue's expectation of a separate correlation for reprocessed goods impractical, as defective goods were reprocessed with fresh materials. Consequently, the Tribunal dismissed all three Appeals of the Revenue, as no infirmity was found in the lower appellate authority's orders. The Tribunal's decision highlighted the importance of the Revenue proving clandestine removal post-reprocessing and the impracticality of expecting separate correlation for goods reprocessed with fresh materials. The case underscored the necessity of proper accounting practices and burden of proof in excise matters. The judgment clarified the standard of evidence required to establish clandestine removal and upheld the lower appellate authority's ruling in favor of the respondents, emphasizing the lack of substance in the Revenue's Appeals.
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