Tribunal overturns duty demands against Shrigonda Sahakari Sakhar Karkhana Ltd due to lack of evidence

The Tribunal set aside the Commissioner's decision confirming duty demands and penalties against M/s. Shrigonda Sahakari Sakhar Karkhana Ltd. The Tribunal found the department lacked substantial evidence of clandestine molasses production and removal, emphasizing the necessity for tangible proof in such cases. The allegations were deemed unsustainable without clear evidence, leading to the appeals being allowed due to insufficient corroboration of the claims.

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Issues: Whether the demand of duty, interest and penalties for alleged clandestine production and removal of molasses was sustainable in the absence of corroborative evidence.

Analysis: Molasses is a by-product of sugar manufacture, and an allegation of clandestine removal of molasses necessarily required supporting material showing clandestine manufacture and removal of sugar cane based production. The department relied mainly on stock discrepancies, samples and low TRS values, but did not conduct meaningful cross-verification with the State excise records or establish the procurement of the huge additional quantity of sugar cane, additional crushing activity, consumption of electricity or other operational inputs that would have been required for such alleged production. In a matter of clandestine removal, the allegation must be supported by tangible and reliable evidence and cannot rest on assumptions or presumptions alone. The absence of corroborative evidence and the absence of any allegation or finding by the State excise authorities weakened the case further.

Conclusion: The demand and penalties were not sustainable, as the alleged clandestine production and removal was not proved.

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