Tribunal overturns central excise duty demand due to lack of evidence

The Tribunal set aside the confirmation of central excise duty demand and penalties imposed on M/s. Galaxy Textiles and its authorized signatory, noting discrepancies in statements and lack of independent evidence supporting clandestine removal allegations. The Tribunal emphasized the need for positive evidence beyond shortages detected during visits to establish illicit removal. As no further evidence corroborated the allegations, the impugned order was overturned, and the appeals were allowed with consequential relief to the appellants.

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Issues:
1. Confirmation of demand of central excise duty on clandestinely removed final product.
2. Imposition of penalties on the appellant company, partner, and authorized signatory.
3. Appeal against the confirmation of demand and penalties.

Analysis:
1. The case involved M/s. Galaxy Textiles, a 100% EOU engaged in manufacturing polyester products. During a visit by officers, a shortage of finished goods was detected, leading to proceedings confirming demand of central excise duty on clandestinely removed final products and customs duty on raw materials. Penalties were imposed on the company, partner, and authorized signatory.

2. The Commissioner (Appeals) set aside the confirmation of customs duty on raw materials but upheld central excise duty confirmation and penalties on the unit and authorized signatory. The appellants appealed this decision, requesting a decision based on their appeal memo grounds. The lower authorities found illicit removal based on shortages and statements by the partner and authorized signatory.

3. The Tribunal noted discrepancies in the statements. While the partner and authorized signatory admitted shortages, they attributed them to clerical errors, not illicit removal. The Tribunal emphasized that allegations of clandestine removal require independent and positive evidence beyond shortages detected during visits. As no further evidence corroborated the allegations, the impugned order was set aside, and appeals were allowed with consequential relief to the appellants.

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