1998 (10) TMI 271 - Commissioner - Central Excise

Summary

Issues:
1. Allegation of illicit clearances of processed fabrics without payment of duty.
2. Dispute over past clearances and connection with other units.
3. Reliance on note book and statement of witness for clandestine removal.
4. Confiscation of seized dyed cotton fabrics within factory premises.
5. Imposition of penalty under Section 11AC.

Detailed Analysis:
1. The case involved an appeal against an Order-in-Original alleging illicit clearances of processed fabrics without duty payment. The appellant was accused of clearing goods in the name of other entities and using invoices to evade duty. The lower authority confirmed a demand of Rs. 4,36,428 and imposed an equivalent penalty under Section 11AC, along with confiscating 2100 L.Mtrs of dyed cotton fabrics.

2. The appellant disputed past clearances mentioned in the show cause notice, arguing they were related to other units and not their own. They claimed no connection with the mentioned entities and challenged the reliability of statements and note books. The appellant also contended that duty liability, if any, should be treated as cum-duty price.

3. The Commissioner analyzed the evidence, noting the reliance on a note book and a witness statement to establish clandestine removal. The appellant denied clearing goods without duty payment and questioned the voluntary nature of the witness statement. The Commissioner emphasized the lack of independent investigation to verify if the goods were actually received by buyers, citing legal precedents requiring the burden of proof to be on the Department.

4. Regarding the confiscation of seized fabrics, the Commissioner found no intention to evade duty as the goods were within the factory premises and not cleared clandestinely. Referring to legal precedents, it was concluded that confiscation and penalties were not justified when no clandestine removal was involved.

5. The Commissioner rejected the lower authority's argument on legal proof, emphasizing the need for clear evidence of clandestine removal. The decision to allow the appeal was based on the lack of conclusive proof of duty evasion, highlighting the importance of substantiated allegations in excise matters.

In conclusion, the appeal was allowed, setting aside the lower authority's order due to insufficient evidence supporting the allegations of clandestine removal and duty evasion.