2017 (1) TMI 365 - AT - Central Excise

Tribunal overturns duty decision due to lack of evidence

The tribunal set aside the lower authorities' decision to impose duty, interest, and penalty on the appellants for alleged clandestine removal of goods ... Cigarettes - clandestine removal of the goods - demand of duty, interest and penalty - Held that: - the appellant is under physical control of the Central Excise Department. Therefore, it cannot be alleged that the appellant is engaged in the manufacture of clandestine removal of the goods. In the absence of positive evidence of clandestine removal by the appellant, the demand is not sustainable - appeal allowed - decided in favor of appellant. Issues:1. Allegation of clandestine removal of goods without cover of invoices.2. Appellant's manufacturing of Filter Cigarettes of Fursat and Seven-10 brand.3. Investigation conducted by DGCEI officers.4. Demand of duty, interest, and penalty imposed on appellants.5. Appellant's physical control by Central Excise Department.6. Comparison with previous tribunal judgments.Analysis:1. The case involves the allegation of clandestine removal of goods without proper invoices. The DGCEI officers conducted searches at various dealers' premises and found Filter Cigarettes of Fursat and Seven-10 brand without legitimate bills. The lower authorities confirmed the demand of duty, interest, and penalty on the appellants for alleged clandestine removal of goods.2. The appellant claimed to manufacture only Filter Cigarettes of Fursat brand and not Seven-10 brand. The appellant argued that no investigation was conducted to prove the goods were cleared without proper invoices. The appellant's physical control by the Central Excise Department was highlighted to refute the allegations of clandestine removal.3. The investigation conducted by DGCEI officers formed a crucial part of the case, where the basis of the allegations against the appellants was established. The lack of evidence regarding the clearance of goods without invoices was a point of contention between the parties.4. The demand of duty, interest, and penalty imposed on the appellants was a significant issue in the case. The appellant challenged the validity of the demand, emphasizing the absence of concrete evidence supporting the allegations of clandestine removal of goods.5. The appellant being under the physical control of the Central Excise Department played a crucial role in the arguments presented. The appellant's physical control status was used to counter the allegations of clandestine activities, asserting that such actions were not possible under the department's supervision.6. The judgment referred to previous tribunal decisions to support the appellant's case. The comparisons with past judgments highlighted the necessity of substantial and reliable evidence to prove clandestine activities. The tribunal found that the department failed to provide such evidence, leading to the setting aside of the impugned order and allowing the appeals filed by the parties.