2016 (7) TMI 292 - AT - Central Excise

Clandestine removal of goods - demand of duty on the basis of turnover of their dealer - manufacturing or automobile parts - Commissioner (Appeals) oberved that clandestine removal of goods is on the basis of assumption and presumption, therefore, the demand of duty are not sustainable - Held that - As it is clear from the facts of the case itself that M/s SVTC is not exclusively dealer of the appellant and exclusively selling goods manufactured by the respondent M/s JYL but purchasing of goods from local market and selling thereof and therefore, it cannot be said that all clearances made by M/s SVTC are of the goods manufactured by M/s JYL. There is no other evidence produced by Revenue to allege that M/s JYL is engaged in the activity of clearance of clandestine removal of goods by way of procuring excess input as consumption of electricity, transportation of goods etc. In the absence of any concrete evidence against M/s JYL, the duty cannot be demanded merely on the basis of turnover of their dealer. No demand can sustain - Decided against the revenue.

Summary

Issues:
- Appeal against dropped duty demand and set aside penalties.

Analysis:
1. Background: The case involved allegations of clandestine removal of goods by a manufacturing company through a trading company. The impugned order dropped duty demand and set aside penalties imposed on all respondents.

2. Allegations and Investigation: The manufacturing company, M/s JYL, was accused of clandestine removal of goods through M/s SVTC based on statements and an agreement. Show cause notices were issued, leading to duty confirmation and penalties by the adjudicating authority.

3. Appellate Proceedings: The ID. Commissioner (Appeals) held that the charge was based on assumption and presumption, rendering the duty demand unsustainable against M/s JYL. The Revenue appealed, arguing that crucial evidence was overlooked.

4. Evidence Consideration: The adjudication order highlighted statements indicating M/s SVTC's dealings with goods manufactured by M/s JYL. However, further investigation revealed that M/s SVTC also purchased goods from other dealers, challenging the presumption of exclusive dealings with M/s JYL.

5. Judicial Observations: The Tribunal noted that the case was built on the presumption of exclusive dealing between M/s SVTC and M/s JYL. However, evidence showed M/s SVTC's purchases from various sources, undermining the clandestine removal allegations.

6. Decision and Rationale: The Tribunal upheld the impugned order, emphasizing the lack of concrete evidence against M/s JYL. The duty demand solely based on the turnover of the dealer was deemed insufficient. The appeals by Revenue were dismissed, affirming the dropped duty demand and penalties set aside.

This detailed analysis showcases the progression of the case, the scrutiny of evidence, and the ultimate decision by the Tribunal to dismiss the Revenue's appeal based on the lack of substantial proof against the manufacturing company, M/s JYL.