2016 (3) TMI 667 - AT - Central Excise

Clandestine manufacture and clearance of dutiable gutka - duty demand against the main appellant - Held that - Even the statements given are not giving any categorical details of the quantum of manufacture and clearance of non-duty paid items. Annexure-A to the show cause notice which stands confirmed in toto, cannot be considered as an admissible way of calculating duty liability under any provisions of law. We find that except for the seized quantity of gutka along with evidence of parallel clearance of further quantity of gutka using the bill of same number, other clandestine clearance cannot be established with any corroborative evidence. Accordingly, we hold that the impugned order is not sustainable except to a duty demand of ₹ 1,73,043/-. Since these are clearances without payment of duty, with full knowledge of the violation of the law, penalty equal to the duty is also sustainable. In view of the above analysis and findings, the appeals filed by the main appellant and others are allowed except to an extent of duty liability of ₹ 1,73,043/- and equal amount of penalty - Decided partly in favour of assessee

Summary

Issues:
- Duty demand against the main appellant for clandestine manufacture and clearance of dutiable gutka.

Analysis:
1. Quantification of Duty Demand:
- The duty demand was confirmed based on a summary calculation without concrete evidence. The calculation method used was deemed arbitrary and presumptive, lacking legal basis or logic. The demand was made on fictitious calculations without proper quantification, raising doubts about its validity under the law.

2. Adjudicating Authority's Reasoning:
- The Adjudicating Authority's reasoning for the duty demand based on admissible statements and most reasonable estimate techniques was found to be flawed. The reliance on statements without corroboration, cross-examination, or tangible evidence was not considered sustainable. The lack of details on procurement of raw materials and clearance to buyers further weakened the case against the appellant.

3. Legal Precedents and Case Laws:
- Various case laws were cited to emphasize the need for cogent evidence in cases of clandestine removal. The judgments highlighted the requirement for concrete proof of unaccounted raw materials and manufacturing processes. The Tribunal's decisions underscored that inculpatory statements alone cannot be the sole basis for confirming clandestine removal.

4. Final Decision:
- After thorough analysis, the Tribunal found the impugned order unsustainable except for a duty liability of &8377; 1,73,043/-, with a corresponding penalty. The appeals filed by the main appellant and others were allowed to a certain extent, acknowledging the lack of substantial evidence to support the duty demand. The decision highlighted the importance of corroborative evidence and legal validity in confirming duty liabilities in cases of alleged clandestine activities.