Clandestine removal needs independent evidence, and cylinder filling from tankers was treated as not amounting to manufacture.
A charge of clandestine removal cannot rest on invoice irregularities alone; independent evidence is required to establish evasion, and the surrounding records here indicated transition-period confusion rather than a second set of clearances. Filling cylinders from tankers was also treated, on the facts and in line with prior Tribunal authority, as not amounting to manufacture for central excise purposes. On both counts, no duty liability survived and the adverse findings were set aside in favour of the assessee.
Issues: (i) Whether the allegation of clandestine removal of excisable goods was sustainable on the basis of the invoices and surrounding records; (ii) Whether filling cylinders from tankers amounted to manufacture so as to attract central excise duty.
Issue (i): Whether the allegation of clandestine removal of excisable goods was sustainable on the basis of the invoices and surrounding records.
Analysis: The goods were cleared during a short transition period under old invoices and subsequently regularised by issuing new invoices containing identical particulars. The record did not disclose any second set of clearances, and the returned invoices were retained in the factory and resumed by the officers. Apart from the invoices, no independent material supported the charge of clandestine removal, and the surrounding circumstances indicated confusion in implementation rather than a deliberate attempt to evade duty.
Conclusion: The allegation of clandestine removal was not proved and the finding was in favour of the assessee.
Issue (ii): Whether filling cylinders from tankers amounted to manufacture so as to attract central excise duty.
Analysis: The activity was identical to the situation considered in prior Tribunal authority dealing with filling gas from tankers into smaller containers. The amendment to the chapter note governing Chapter 28 did not, on the facts, justify a different conclusion, and the assessee's activity was treated as not amounting to manufacture for the relevant duty demand.
Conclusion: The activity did not amount to manufacture and no duty liability survived on that count, in favour of the assessee.
Final Conclusion: The duty demand and related adverse findings were set aside, and the appeal succeeded in full.
Ratio Decidendi: A charge of clandestine removal requires independent supporting evidence beyond invoice irregularities, and a filling activity of the kind involved here did not amount to manufacture for central excise purposes on the facts found.
TaxTMI 
AI Drafter ✕
TaxTMI 
