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Issues: (i) Whether clandestine removal of pan masala could be sustained solely on shortage of supari and laminated foil. (ii) Whether confiscation of excess stock of pan masala was justified in the absence of contrary evidence.
Issue (i): Whether clandestine removal of pan masala could be sustained solely on shortage of supari and laminated foil.
Analysis: The allegation rested only on shortage of certain raw material and packing material. The record did not show shortage of other essential ingredients needed for manufacture of pan masala, and there was no corroborative evidence linking the shortage to clandestine manufacture or removal.
Conclusion: The allegation of clandestine removal was not proved and the finding went in favour of the assessee.
Issue (ii): Whether confiscation of excess stock of pan masala was justified in the absence of contrary evidence.
Analysis: The stock was found to be under packing and not yet at the stage for entry in the RG-I register. The proprietor's explanation was not displaced by any contrary evidence from the Revenue.
Conclusion: Confiscation was not justified and the finding went in favour of the assessee.
Final Conclusion: The order of the Commissioner (Appeals) was sustained and the Revenue's challenge failed.
Ratio Decidendi: Clandestine removal and confiscation cannot be sustained merely on isolated stock shortage or incomplete packing without corroborative evidence establishing manufacture, removal, or culpable conduct.
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