2018 (8) TMI 788 - AT - Central Excise

Clandestine removal - excesses of stock - no corroborative evidence - demand solely based upon the entries made in the spiral diary recovered from the appellant s premises during the raid - Held that - As the entire case of the Revenue is based upon the entries made in the said diary as also the 18 loose slips without their being any other evidence on record, it is difficult to accept the findings of clandestine removal. The allegations are of clandestine removal in respect of huge quantum of the final products having been manufactured by the appellant to the extent of around 3.88 crores approx., which require a lot of raw material, their actual manufactured in the assessee s factory in a clandestine manner, transportation of the same, buyers who have purchased it and the receipt of consideration by the appellant from their buyers. There is virtually no evidence produced by the Revenue as regards procurement of such a huge raw material or identification of transporters or buyers. The entire case stand made out on the basis of the entries made in the said private notebook without their being any corroborative evidences. It is well settled law that the allegations of clandestine removal are required to be established by production of sufficient and positive evidences, the onus for which lies heavily upon the Revenue - demand alongwith penalty set aside. Demand of duty in respect of the goods seized from the dealer s premises and confiscation of the same along with the imposition of penalties - Held that - It is well settled law that the goods found in the market are deemed to be duty paid unless established to be cleared without payment of duty by production of sufficient evidences. Inasmuch as we have already held that there is virtually no evidences on record to show clandestine removal on the part of the appellant, the confirmation of demand in respect of such goods found at the dealer s premises cannot be upheld - confiscation and penalties set aside. Shortages and excesses found in the assessee s premises which is spread over a period of time being below the permissible tolerance limit as per the provisions of the Standard of Weight and Measures Rules, 1977 and being nominal percentage has to be considered as genuine and not requiring any payment of duty or confiscation. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Allegations of clandestine removal of goods without payment of duty.
2. Confirmation of duty demands and penalties based on seized goods and documents.
3. Validity of evidence and statements relied upon by the Revenue.
4. Assessment of shortages and excesses found in the assessee's premises.

Analysis:
1. The judgment addresses the allegations of clandestine removal of goods without duty payment by M/s Shiva Poly Plast Pvt. Ltd. The Revenue claimed that the goods found at dealers' premises were cleared by the manufacturer without duty payment, leading to duty demands and penalties. The Tribunal noted that the case was solely based on entries in a diary and loose slips without sufficient evidence. The statements of involved parties were retracted, and no corroborative evidence was presented, leading to the dismissal of the allegations.

2. The confirmation of duty demands and penalties based on seized goods and documents was contested by the appellants. The Revenue issued show cause notices demanding duty payment and proposing penalties. However, during cross-examination, witnesses retracted their statements, denying any purchase of goods without duty invoices. The Tribunal found the Revenue's case solely reliant on rough documents without corroborative evidence, leading to the rejection of the demands and penalties.

3. The validity of evidence and statements relied upon by the Revenue was crucial in the judgment. The Tribunal highlighted the lack of sufficient and positive evidence to establish the allegations of clandestine removal. The onus was on the Revenue to provide tangible evidence, including procurement of raw material, identification of transporters and buyers, which was absent. The Tribunal emphasized the need for clinching evidence and rejected the case based on presumptions and assumptions.

4. Assessment of shortages and excesses found in the assessee's premises was also discussed. The Tribunal considered shortages below permissible limits as genuine and not indicative of clandestine clearances. Citing legal precedents, the Tribunal set aside demands for duty payment on shortages and confiscation of excess goods found on the premises. The judgment emphasized the importance of concrete evidence and rejected demands based on shortages alone.

In conclusion, the Tribunal dismissed the demands, penalties, and confiscations imposed by the Revenue due to insufficient evidence and lack of corroborative proof in the case of alleged clandestine removal and seized goods. The judgment highlighted the necessity of tangible evidence and the rejection of demands based on assumptions or retracted statements.