1999 (7) TMI 264 - AT - Central Excise

Summary

Issues involved: Allegation of clandestine removal of chemical without payment of duty based on cancellation of an invoice and stock verification.

Issue 1 - Cancellation of Invoice and Stock Verification:
The impugned order alleged that 1600 litres of chemical were clandestinely removed without duty payment as they were not found in stock during verification, and an invoice for 2000 litres was cancelled the day before. The appellants explained that they cancelled the invoice due to insufficient funds for duty payment and prepared a new invoice for 1800 litres. They also notified the authorities promptly about the cancellation. The appellants maintained that the missing quantity was stored in filtration tanks post-manufacturing.

Issue 2 - Lack of Evidence and Presumptions:
During the appeal, the consultant argued that the impugned order was based on assumptions without concrete evidence. He emphasized that the cancellation of the invoice was legitimate due to insufficient funds for duty payment, supported by the balance in relevant accounts. The consultant contended that the finding of clandestine removal was unfounded, as there was no proof of goods being sent or received. He cited previous cases to support the requirement of reliable evidence for such allegations.

Issue 3 - Burden of Proof for Clandestine Activities:
The department argued that strict proof was not necessary for clandestine activities, citing Supreme Court precedents. However, the consultant countered that these precedents were not applicable to the present case, as no evidence supported the allegation of clandestine removal. He referenced a CEGAT decision emphasizing the department's burden to prove clandestine activities with credible evidence.

Judgment Summary:
Upon reviewing the case records and submissions, the Member found that the allegation of clandestine removal lacked concrete evidence and relied on circumstantial factors like the relationship between the appellants and consignees. The Member noted that the cancellation of the invoice was justified due to insufficient funds for duty payment and that the goods were accounted for in filtration tanks. The Member concluded that the finding of clandestine removal was not based on proper evidence appreciation and overturned the impugned order, allowing the appeal. The Member highlighted the need for more substantial evidence to support charges of clandestine activities and rejected the reliance on previous Supreme Court cases that did not align with the present circumstances.