2018 (4) TMI 362 - AT - Central Excise

Clandestine removal - shortage of goods - confiscation of Indian currencies - penalties - Held that - the entire case of the Revenue is based upon the shortages detected at the time of visit of the officers. There is no other evidence to show clandestine removal of the said goods. It is well settled law that the shortages by itself do not lead to inevitable conclusion of their clandestine removal - impugned order set aside. The appellants have been able to establish, beyond doubt, the legal possession of the said Indian currency, in which case, the same cannot be held to be the sale proceeds of clandestinely removed goods - Inasmuch as the Revenue has not produced any evidence contrary to the evidence produced by Ahujas showing the legal possession of the Indian currency, confiscation not justified. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Confirmation of demands of duties on allegations of clandestine removal
2. Imposition of penalties on assesses
3. Confiscation of Indian currency recovered
4. Legal possession of Indian currency

Confirmation of demands of duties on allegations of clandestine removal:
The appeals filed by both the assesses and the Revenue were disposed of by a common order as they arose from the same set of facts. The assesses' appeals were against the confirmation of demands of duties based on allegations of clandestine removal due to shortages detected during a visit to their factories. The Revenue's appeals contested the part of the order setting aside the confiscation of Indian currency found during a search. The shortages alone were not sufficient evidence to conclude clandestine removal, as established by legal precedents cited. The Tribunal found no other evidence supporting the Revenue's claims of clandestine removal based on shortages, leading to the allowance of the assesses' appeals.

Imposition of penalties on assesses:
The assesses were engaged in manufacturing excisable goods, and shortages were detected in final products and raw materials during the officers' visit. The Revenue initiated proceedings against the assesses for confirmation of demands and penalties. However, the Commissioner (Appeals) set aside the confiscation of Indian currency, finding it duly explained and accounted for. The Tribunal emphasized that shortages alone do not prove clandestine removal, citing legal decisions to support this position. As a result, the appeals filed by the assesses against penalties were allowed.

Confiscation of Indian currency recovered:
The Revenue's appeals were against the setting aside of the confiscation of Indian currency recovered from the assesses' premises. The Appellate Authority verified the statements and accounts of the assesses, concluding that the legal possession of the currency was established. Legal precedents and decisions were cited to emphasize that the Revenue had the onus to prove that the currency was proceeds of non-duty paid items, which was not substantiated. As the Revenue failed to provide evidence contradicting the assesses' proof of legal possession, the Tribunal rejected the Revenue's appeals.

Legal possession of Indian currency:
The Appellate Authority and legal precedents highlighted the requirement for the Revenue to prove beyond doubt that the Indian currency recovered was from the sale proceeds of tainted goods. Various court decisions upheld the need for cogent evidence linking the currency to smuggled goods. Since the Revenue did not present evidence contrary to the assesses' demonstration of legal possession, the Tribunal found no reason to interfere with the impugned orders. Consequently, the assesses' appeals were allowed, and the Revenue's appeals were rejected.