2005 (9) TMI 426 - AT - Central Excise

Tribunal Overturns Commissioner's Decision in Clandestine Goods Case

The Tribunal overturned the Commissioner's decision in a case involving alleged clandestine clearance of excisable goods under Rule 173H. The Tribunal ... Demand - Clandestine removal - Evidence Issues:1. Alleged clandestine clearance of excisable goods under Rule 173H.2. Rejection of evidence by the Commissioner.3. Burden of proof on the assessee.4. Reliability of evidence produced.5. Lack of supportive evidence from the Revenue.6. Presumptions and assumptions made by the Commissioner.Analysis:1. The appeals stemmed from the Commissioner's order alleging clandestine clearance of excisable goods under Rule 173H. The Commissioner rejected the evidence presented by the assessee, claiming that the goods were not repaired but replaced with fresh ones, leading to demands, fines, and penalties. The matter was remanded for reconsideration to assess evidence like Form V registers and reprocessed invoice copies.2. The Tribunal disagreed with the Commissioner's rejection of evidence, finding it sufficient to establish that defective goods were received, entered in Form V registers, and cleared as reprocessed goods with proper invoices. The Tribunal criticized the Commissioner for faulting the assessee for not producing batch movement cards and confirmed that the evidence proved the goods were reworked and not cleared clandestinely as fresh goods without duty payment.3. The burden of proof was on the Revenue to demonstrate any excess inputs or shortages, but no evidence of purchase, manufacture, or clearance of goods without duty payment was presented. The Tribunal emphasized that rejected goods were properly documented in Form V invoices, and the evidence provided by the assessee, including statements and details of processed items, was credible and not properly refuted by the Revenue.4. The Tribunal found no reason to doubt the reliability of the evidence produced by the assessee, highlighting that the Commissioner's conclusions were based on presumptions and assumptions rather than concrete evidence. The Tribunal emphasized that the evidence clearly showed reworked goods were cleared, not fresh goods clandestinely.5. The Revenue failed to provide supportive evidence or statements from customers indicating non-receipt or clearance without duty payment. The Tribunal noted the lack of any substantial evidence against the assessee and criticized the Commissioner for not properly justifying the rejection of the evidence presented.6. The Commissioner's findings were deemed to lack merit, as they were based on presumptions and assumptions rather than the concrete evidence provided by the assessee. The Tribunal ultimately accepted the assessee's contentions supported by evidence, allowing the appeal and providing consequential relief if necessary.