2020 (2) TMI 808 - AT - Central Excise

Clandestine removal - shortages of the finished goods - discrepancies in the RG-1 Register with the production slips - HELD THAT - Commissioner (Appeals) set aside the impugned order by appreciating the assessee s plea that the differences in stock between RG-1 and notebook has occurred due to different types of methods of calculation adopted i.e. light standard method and sectional weight method. He further observed that there is no corroborative evidence in the shape of procurement of raw materials, transportation of goods and copy of the sale receipt etc. Reliance placed in Tribunal decision in the case of RA CASTINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-I 2008 (6) TMI 197 - CESTAT NEW DELHI where it was observed that there is absolutely no evidence of manufacture and removal of the excisable goods. As against the findings of Commissioner (Appeals), Revenue has not drawn our attention to any other factor so as to upset the findings of the Appellate Authority - there are no infirmity in the impugned order - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against order passed by Commissioner (Appeals) - Alleged shortages of finished goods and discrepancies in RG-1 Register - Demand of duty, interest, and penalties confirmed - Appellate Tribunal's analysis of the case.

Analysis:

1. Background and Facts:
The case involves an appeal filed by the Revenue against an order passed by the Commissioner (Appeals) concerning shortages of finished goods and discrepancies in the RG-1 Register found during a visit to the respondents' factory. The Central Excise officers initiated proceedings leading to a demand of duty, interest, and penalties amounting to ?53,42,108.

2. Appreciation of Commissioner (Appeals):
The Commissioner (Appeals) set aside the impugned order after considering the respondents' explanation that the differences in stock were due to different calculation methods used. The Commissioner observed a lack of corroborative evidence such as procurement records, transportation details, and sale receipts to support the allegations. Citing a Tribunal decision upheld by the Allahabad High Court and the Supreme Court, the Commissioner concluded that there was no evidence of manufacture and removal of excisable goods.

3. Relevant Paragraphs of the Impugned Order:
The Commissioner highlighted that the allegations of clandestine removal were not substantiated with tangible evidence. Referring to a specific case law, the Commissioner emphasized the need for direct and incontrovertible evidence, including raw material receipts, production details, transportation records, and sale proceeds. The absence of such evidence led to the rejection of the demand and penalties imposed on the appellants.

4. Appellate Tribunal's Decision:
The Appellate Tribunal, comprising HON’BLE MRS. ARCHANA WADHWA and HON’BLE MR. ANIL G. SHAKKARWAR, upheld the findings of the Commissioner (Appeals) as the Revenue failed to present any new evidence to challenge the appellate authority's conclusions. The Tribunal found no flaws in the impugned order and consequently dismissed the Revenue's appeal.

5. Legal Precedents and Burden of Proof:
The case underscores the importance of substantiating allegations of clandestine manufacture and removal with concrete evidence as per established legal principles. The Tribunal's decision aligns with previous rulings emphasizing the burden of proof on the department to establish wrongdoing through tangible and verifiable evidence.

6. Conclusion:
The judgment highlights the significance of maintaining accurate records and providing substantial evidence to support allegations in excise duty cases. The case serves as a reminder of the stringent evidentiary requirements in proving clandestine activities, ultimately leading to the dismissal of the Revenue's appeal due to lack of compelling evidence.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the legal reasoning applied by the Commissioner (Appeals) and the Appellate Tribunal, and the significance of evidence in excise duty cases.