2006 (12) TMI 524 - AT - Central Excise

Tribunal overturns duty demand on fabrics due to lack of evidence, ruling in favor of appellants.

The Tribunal set aside the duty demand and penalty imposed on unaccounted processed fabrics, ruling in favor of the appellants. The Revenue failed to ... - Appellate tribunal dealt with demand of duty (Rs. 5,69,075) and equal penalty on 142,268.79 linear meters of processed fabrics alleged to be unaccounted for by processors. Records showed receipt of 2,102,962 LM grey cloth, accounting for 1,877,521.23 LM processed and cleared on payment of duty, leaving 225,440.57 LM unaccounted; after allowing 4% normal shrinkage, 142,268.79 LM remained. Revenue alleged 'clandestine removal' and imposed duty and penalty. Tribunal found that the Revenue had not discharged the burden of proving clandestine clearance. Reliance was placed on authorities holding that 'clandestine clearance can be established only on the basis of sufficient evidence.' Mere high percentage of shrinkage or unexplained shortage did not automatically establish clandestine clearance; department's conclusion lacked corroborative evidence. Consequently the finding of clandestine removal, the duty demand and penalty were set aside and the appeal allowed.