2005 (5) TMI 525 - AT - Central Excise

Tribunal overturns duty confirmation and penalties due to lack of evidence

PRABHAT INDUSTRIES Versus COMMISSIONER OF CENTRAL EXCISE, VALSAD

PRABHAT INDUSTRIES Versus COMMISSIONER OF CENTRAL EXCISE, VALSAD - 2006 (193) E.L.T. 253 (Tri. - Mumbai) Issues:- Confirmation of duty against M/s. Prabhat Industries- Imposition of personal penalty on M/s. Prabhat Industries- Imposition of personal penalty on other two appellants- Clandestine removal of coated cotton fabrics- Retraction of statement by Manager- Lack of details on time, date, and buyers in Manager's statementConfirmation of Duty against M/s. Prabhat Industries:The judgment revolves around the confirmation of duty against M/s. Prabhat Industries amounting to Rs. 51,606 for the alleged clandestine removal of coated cotton fabrics. Central Excise Officers discovered a shortage during a visit to the factory, leading to the duty confirmation. The appellant argued that the shortage was due to goods being held for inspection by the Indian Railway and Defence Ministry, which was not verified by the officers. The Tribunal emphasized that charges of clandestine removal require substantial evidence beyond mere shortages. As the revenue failed to investigate further or provide conclusive evidence, the benefit of doubt was extended to the appellants, resulting in the impugned order being set aside.Imposition of Personal Penalty:In addition to duty confirmation, personal penalties of Rs. 50,000 each were imposed on M/s. Prabhat Industries and two other appellants under Rule 209-A of Central Excise Rules, 1944. The Manager initially admitted to the clandestine removal in a statement but later retracted it, claiming the goods were in the factory for inspection. The Tribunal noted that the revenue's case relied solely on shortages and the Manager's statement without additional evidence. Citing the lack of effort to substantiate the charge of clandestine removal, the Tribunal ruled in favor of the appellants, setting aside the penalties along with the duty confirmation.Clandestine Removal of Coated Cotton Fabrics:The case centered on the alleged clandestine removal of coated cotton fabrics from M/s. Prabhat Industries without payment of Central Excise duty. The Manager's initial admission to shortages and clandestine removal was later contradicted by the assertion that the goods were held for inspection. The Tribunal highlighted the necessity for concrete evidence to prove clandestine removal beyond mere shortages. As the revenue failed to provide substantial evidence, the Tribunal granted the appellants the benefit of the doubt, leading to the dismissal of the allegations.Retraction of Statement by Manager:The Manager of M/s. Prabhat Industries initially admitted to the shortages and clandestine removal of goods in a statement to Central Excise Officers. However, the Manager later retracted this statement, claiming the goods were present in the factory for inspection. This retraction, coupled with the lack of further investigation by the revenue, raised doubts regarding the validity of the initial admission. The Tribunal considered the retraction and absence of concrete evidence, ultimately ruling in favor of the appellants.Lack of Details on Time, Date, and Buyers in Manager's Statement:The Manager's statement regarding the shortages and alleged clandestine removal lacked crucial details such as the time, date, and names of buyers. Despite the initial admission, the Manager's subsequent clarification that the goods were awaiting inspection by relevant authorities raised questions about the accuracy of the earlier statement. The Tribunal emphasized the importance of comprehensive evidence to support allegations of clandestine removal, highlighting the insufficiency of the Manager's initial statement in the absence of further substantiation.