2018 (3) TMI 617 - AT - Central Excise

Clandestine removal - demand on the sole ground of comparison of entries made in ER-1 return with the entries made in balance sheet, without there being any other evidence on record - Held that - the clandestine removal allegations cannot be upheld on comparison of figures appearing in balance sheet and ER-1 returns inasmuch as in the present appeal such comparison is the only reason for upholding the charges of clandestine removal, I find no valid ground for upholding the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues: Allegations of clandestine removal and evasion of duty based on comparison of entries in ER-1 return and balance sheet without additional evidence.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the appellant, a manufacturer of bulk explosives, faced allegations of clandestine removal and duty evasion amounting to ?36,49,762. The confirmation of these allegations was solely based on the comparison of entries in the ER-1 return with those in the balance sheet, without any other supporting evidence on record. The Commissioner (Appeals) upheld the demand of duty and penalty despite acknowledging the absence of evidence for clandestine removal. The Tribunal emphasized that the burden of proving clandestine activities lies on the Revenue and requires positive and tangible evidence. The judgment highlighted that the negative onus cannot be placed on the assessee to prove the absence of evidence. The Tribunal also referenced several precedent decisions to support the principle that entries in the balance sheet alone are insufficient to establish charges of clandestine removal.

Moreover, the Tribunal pointed out that previous decisions have consistently held that allegations of clandestine removal cannot be sustained merely based on a comparison of figures in the balance sheet and ER-1 returns. Since the comparison of entries was the sole basis for upholding the charges in the present case, the Tribunal found no valid ground to support the impugned order. Consequently, the Tribunal set aside the order and allowed the appeal, providing consequential relief to the appellant.