2017 (7) TMI 404 - AT - Central Excise

Excess goods manufactured - Surrender of income - Held that - As the duty has been demanded from the appellant without adducing any evidence by the Revenue that the appellant has manufactured excess goods. The duty can be demanded on the manufactured goods only and not other activities. Therefore in the absence of any evidence of excess manufactured goods demand against the appellant is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of duty based on income surrendered to Income Tax department without independent evidence.

Analysis:
The judgment pertains to a case where a demand of ?1,51,33,750/- was confirmed against the appellant, who is engaged in manufacturing medicines, injections, and eye drops. The Income Tax department conducted an investigation and the appellant surrendered certain income, which was then intimated to the Central Excise department. Subsequently, a show cause notice was issued to the appellant treating the surrendered income as income from the sale of manufactured goods, leading to the demand of duty, interest, and penalties. The appellant contended that the surrendered income was explained as belonging to their father or invested in immovable property, and no investigation was conducted to verify if excess goods were manufactured. The appellant relied on precedents to argue that the demands were not sustainable due to lack of evidence.

During the hearing, the appellant's counsel referenced previous cases to support their argument that duty can only be demanded on manufactured goods, and in the absence of evidence showing excess production, the demand is not justified. The Tribunal cited a previous case where it was established that duty is payable on the actual manufacture and clearance of goods, and without evidence of such activities, duty cannot be demanded. As the Revenue failed to provide evidence of excess manufactured goods by the appellant, the demand was deemed unsustainable. Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellant.