2007 (2) TMI 566 - AT - Central Excise

Manufacturers win appeal against duty demand for alleged clandestine removal due to lack of evidence

KARAN TEXTILE INDUSTRIES Versus COMMISSIONER OF C. EX., SURAT

The duty demand against the manufacturers of Texurised Yarn for alleged clandestine removal based on discrepancies between the balance sheet and RG-1 ... Clandestine removal - Proof of Issues involved: Confirmation of duty demand based on clandestine removal allegations in balance sheet and RG-1 register for the year 1995-96.Confirmation of duty demand: The demand of duty was confirmed against the appellants, manufacturers of Texurised Yarn, for alleged clandestine removal. The findings were based on comparing the opening balance in the balance sheet with the stock figure in the RG-1 register, and also on comparing the sale of goods in the balance sheet with the quantity in the RG-1 register for the same year. The show cause notice was issued in 2000 for the year 1995-96.Contestation by the appellants: The appellants contested that the opening stock figure and closing balance figure in the balance sheet were added instead of being deducted to find the difference. They also referred to various decisions to contest the allegations. The Revenue's case relied solely on comparing figures in the balance sheet and RG-1 register. There was no statement from an authorized officer or any independent evidence to corroborate the charge of clandestine removal. The allegation of clandestine removal needed to be established by the Revenue with satisfactory or positive evidence, not assumptions. Discrepancies between balance sheet and RG-1 figures could raise doubts but were not conclusive evidence of clandestine removal. Therefore, confirming the duty demand or imposing penalties was deemed unjustified and unwarranted. The impugned order was set aside, and the appeal was allowed in favor of the appellants.